1. What is the nature of the contractual allowance account? Can you equate it to other allowance accounts? Explain the rules under GAAP to account for such allowances.
2. Personal morality and ethics make up the collective morality and ethics of a corporation. Given our discussion about the ethics of organizations in Chapter 3, evaluate the ethical climate at Health South and the tone at the top established by key officers and company decisions.
3. Small concessions lead to greater compromises and, unchecked, will lead to serious ethical lapses and even crime. As detailed in the case, nobody sets out to end their career in prison. Several people from Health South in fact did end their career that way; it all started with small, seemingly insignificant, compromises. Comment on this statement from the perspective of ethical decision-making.
4. Looking at the findings of Craig Greene, the certified fraud examiner who investigated the HealthSouth fraud, explain why so-called red flags are important in an independent audit. In other words, what is the purpose of an auditor looking for financial information to sense the alarm bells that warn of danger ahead?