Assignment: Provide typed answers to the following questions and be prepared to discuss in class.
1. Define ethics--Include the reference for your definition.
2. (a) What is insider trading? (b) In your opinion, is it ethical? Explain (c) Is it legal? explain
3. (a) What caused Enron's collapse? (b) Did management act in an ethical manner?
(c) Were there any potential (or real) ethical issues related to Arthur Andersen's role as Enron's auditor and another part of Andersen providing Information Technology Consulting?
4. (a) What accounting practice/standard/rule was not followed at WorldCom? (b) An employee in the accounting organization warned management of the implications/dangers of not following appropriate accounting standards. He was fired. Was it ethical, in your opinion, to fire the employee? Explain your thoughts/answer.
5. Some companies have "Codes or Standards of Conduct" which are published and employees are expected to abide by the standards in conducting company business.
The objective is to protect both the company and the individual. A private phone number along with a promise of anonymity is provided. Employees are given the opportunity to call the number if they feel they are asked to do something contrary to the "code" or are convinced someone else might be. (a) Is this private number an ethical procedure on the part of the company? Please explain your answer.
(b) Would it be ethical for you to call the number if you were found in a situation that warranted a call? What if it were your boss that you were concerned about---how would you handle the situation??
6. During the recent financial crisis related to housing/loans/various financial instruments, it was found that individuals were provided a low, introductory interest rate that would reset at a much higher rate in a future period. (a) Was it ethical to provide a loan to an individual when it was unlikely they would be unable to continue paying after the interest rate increased? Please explain. (b) Was it ethical for an individual to take the loan if in their mind it was highly likely that they would not be able to pay the loan when the rate increased? Please explain.