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University of San Carlos

P. Del Rosario Street


Cebu City

Department of Business Administration


School of Business and Economics

A Book Review on:

Accounting Ethics by Ronald Duska, Brenda Shay Duska and Julie Ragatz

In Partial Fulfillment of the Requirements of


BA 102A Business Ethics
10:30-12:00NN MW EH 202 1st Semester AY 2017-2018

Submitted by:
SANDRA MAE O. CABUEAS
BSA-5

Submitted to:
MARIA ANGELITA RAMONA L. VALLES

July 24, 2017

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BOOK REVIEW PAPER #: 1

Name of Student: Sandra Mae O. Cabueas Date: July 24, 2017

A. GENERAL FEATURES OF THE BOOK:

Title of the Book: Accounting Ethics 2nd Edition


Name of Author/s: Ronald Duska, Brenda Shay Duska, Julie Ragatz
Place of Publication: United Kingdom
Name of Publisher: Wiley-Blackwell
Copyright Date: 2011
Total No. Of Pages: 241

B. SPECIAL FEATURES OF THE BOOK:

Preface:
The authors target readers are the accounting professionals. The book was written to address the
ethical problems in the field of accounting and to keep the readers up-to-date with the emergence
of various ethical standards established by international regulatory bodies. It particularly tackles
the subject areas of accounting including the financial crises and the principles-based approach
used in the preparation and presentation of financial statements.
Authors Background:
Ronald Duska is The Charles Lamont Post Chair of Ethics and the Professions at the American
College as well as the Director of the Center for Ethics in Financial Services.
Brenda Shay Duska MT, CPA, is currently a manager at Del Pizzo & Associates, specializing in
taxation. She is a member of the Pennsylvania Institute of Certified Public Accountants and the
Society for Financial Service Professionals.
Julie Ann Ragatz is Assistant Professor of Ethics at The American College and the Associate
Director of the Center for Ethics in Financial Services. She is currently finishing her PhD in
philosophy at Temple University where she concentrates on ethical theory and applied ethics.
Table of Contents: The book contains ten chapters which are arranged from the general concepts
down to the specific and interrelated topics. The titles used are phrases indicative of the content
for each chapter. Each chapter has at least two subtopics arranged in a logical manner. Three
pages were allotted for the Table of Contents which is the lone type presented in the book.
List of Figures: There is no list of figures found in the book.
List of Tables: There are no statistical data provided in the book.
Glossary: There is no glossary included in the book.
Index: Nine pages were allocated for the index arranged alphabetically, combining the names of
authors and subjects involved.
Appendix: There were 16 pages allotted for both appendices A and B. They are identified in
terms of the founding concepts and ideas from which the overall topic relies upon.
Bibliography: There is no bibliography included in the book.
Others: The title of the book attracted me to take a look into it. Its book design captures the
origin of accounting as exhibited by the abacus in black and white. It is a thin paper bound book
which is made of bond paper. Collectively, it utilizes smaller times new roman font type.

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C. SUMMARY:

The authors introduced the nature of accounting and the chief ethical difficulty using
one of the financial scandals of the century, the Enron and Arthur Andersen case. Enron
disclosed that it shrank shareholder equity by $1.2 billion as a result of several transactions,
including ones undertaken with their CFO Mr. Fastows investment vehicle. Arthur Andersen
was Enrons auditing firm. Andersen was convicted of obstruction of justice for shredding
documents related to its audit of Enron, resulting in the Enron scandal.
Accounting was defined as a technique, and its practice is an art or craft developed to
help people monitor their economic transactions. Accounting gives people a financial picture of
their affairs. Furthermore, the accountant provides information that can be used in a number of
ways. One is through the organizations managers use of it to help them in planning and
controlling the organizations operations. Another way is its usefulness to the owners, managers,
lenders, suppliers, employees and others to help in the decision-making phase as to how much
time and/or money to devote to the organization.
The ethics of truth telling and disclosure is a complicated issue for the accountant. It
may be difficult in some situations to decide how much to disclose. The accountant must at least
meet the disclosure requirements of governing authorities. In the preparation and presentation
of financial statements, the most common measurement principles are the generally accepted
accounting principles, henceforth, GAAP. Those principles are supervised by the Financial
Accounting Standards Board which does have the statutory authority to set financial accounting
and reporting standards for publicly held companies under the Securities Exchange. But even
with the adherence to GAAP, problems of disclosure arise.
An accountant is said to be able to wear different hats. Although the accountants
primary purpose is to present a picture of an organizations financial affairs, accountants play
many other roles such as in the areas of auditing, managerial accounting, tax accounting,
financial planning, and consulting. With all these roles, accountants have a number of ethical
responsibilities to themselves, their families, their profession, and the clients and company for
which they work.
The authors of the book discussed the concepts relating to the Ethical Theory such as
Egoism, Utilitarianism, Kant and Deontology, Deontological Ethics, and the Categorical
Imperative. Virtue Ethics is also a part of the series of discussions. The later parts of the book
also tackled about accounting as a profession and the accounting codes of conduct. It further
discussed the auditing function covering the ethics of public accounting, the auditors
responsibility to the public as well as the basic responsibilities, independence and the risk
associated to it, professional skepticism, and concept of reasonable assurance.
The Ethics of Managerial and Tax Accounting were also discussed in relation to the
accounting areas concerned and the reasons used to justify unethical behaviors in the industry.
Ethics was also placed within the premise of an accounting firm. It deals with accounting as a
business and the corresponding social responsibility attached to it. Good ethics and the ethical
responsibilities of accounting firms including some of the arising issues were put in the
limelight.
Finally, current debates on accounting issues were presented. The following are some
of the issues, namely: Fair Value and Principles vs. Rules; Fair Value Accounting; GAAP and;
the concept on fair presentation.

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The Social Responsibility of Business

A business is a social institution developed from the view that its fundamental
concern is to generate revenues and earn profits. Milton Friedman said that the primary and
only responsibility of business is to use its resources and engage in activities designed to
increase its profits so long as it stays within the rules of the game, which is to say, engages in
open and free competition without deception and fraud. The author further supported the
discussion with the introduction of Adam Smiths The Wealth of Nations. With the concept of the
invisible hand saying that the pursuit of self-interest makes commerce and society flourish by
setting up free markets.

The author clearly said that because business was constructed by society, we must
assume that it was constructed to benefit society. It follows, then, that society instituted business
to help itself develop and survive. An ethical business fulfills its purposes and betters society
through production of goods and services. An ethical accounting firm fulfills its purpose by
being faithful to the needs of society, for which it has been given a specific mandate.

A recurrent theme of the book is that it is important, from an ethical standpoint, to be


clear about somethings purpose. Knowing its purpose gives us a standard by which to judge it.
Certainly, the author presented more or less all the intervening concepts related to the existence
of business and its end-goal.

The authors had chosen to present concepts in the book by way of presenting the
status quo together with the actual business practices. As the fundamental theories which make
up the business reality are being elaborated, the authors would often extract some excerpts from
known business and economics tycoons. From such flow, a series of discussions then follow. An
attempt to integrate and even compare different schools of thought can be observed as a writing
technique employed by the said authors.

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Tax professionals should help people pay what they owe not more, not less.
- Mark Everson

Understanding taxation as an inherent power of a sovereign state is a necessity for all.


Some may have been fortunate enough to get a business degree which incorporates courses on
income taxation and business taxation. Others have various means to learn about tax, particularly
the tax forms applicable for certain taxpayers, how to file them, when to file such, and what
remedies to avail in cases of tax assessments or investigations.

Accountants in the practice of taxation are truly technically competent. They basically
know all the ins and outs of filing and paying taxes. Since accountants are vested with public
trust to aid their clients in computing taxes due, filing returns, and paying taxes, they have the
responsibility to help people pay what they really owe. After all, the taxes paid will form part of
the public fund used to defray the governments expenses. The public services and projects will
ultimately benefit the general society. Thus, it is nothing but moral to give ones fair share.

In the governments side, the Bureau of Internal Revenue is given the responsibility to
administer, assess, and collect taxes. Accountants are also being employed by the BIR, whether
as the Commissioner, Regional Director, Revenue District Officer, Chief of Section, and the like.
Such great power is a manifestation that accountants must exercise extraordinary diligence in the
performance and discharge of their duties. They are accountable to the public for all the funds
that are collected. Needless to say, the accounting profession must keep up with the demand of
the society by delivering their tasks in an ethical and moral manner.

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D. REACTION/REFLECTION:

The Accountancy Profession is ever-dynamic, yet the fundamental principles remain the
same. It all started with the Italian merchants who conceptualized the giurnale whose sole
purpose was to account for all their business affairs. Later in the development of the accounting
process, the double-entry journaling came into existence. Coupled with the postings made in the
ledger, a trial balance can be extracted that is then used to prepare a statement of financial
condition and statement of operations. Though accounting may seem purely clerical in nature,
what most of the people miss is the process undertaken to analyze economic and business
transactions as to the recognition, classification, measurement, and presentation of every item in
comparison with generally accepted criteria. Users of financial information must understand that
not all economic transactions are worth recognition.

The concept of ethics in every profession serves as a guide that help the public gauge the
morality of an act. Well, it is a fact that the economy thrives when businesses are doing good.
When we speak of good, we almost always refer to the financial stability and the capacity of a
company to sustain its activities. A lesson that I got from one of my professors is the value of
sustainability. That is what makes a corporate institution distinct from the rest of the SEC-
registered corporations and partnerships. Succession is another aspect with which sustainability
co-exists. We know of the Ayalas, Aboitizes, and the like. I, for one, am a believer of the
Aboitizes vision of a better world. There had been so many opportunities and encounters which
I had all because of their corporate social responsibility programs and some other leadership
programs for the youth. In some way, all those things had led me to know more of how they do
business and how they were able to sustain their family conglomerate up into their fifth
generation now since their coming here in the Philippines.

To share some of my treasured experiences, I will start with the Young Minds Academy
(YMA) program of the Ramon Aboitiz Foundation, Inc. The YMA is an 8-month long leadership
training program for the youth designed to expose them to the various leadership roles that are
essential for Cebu and for the rest of the Philippines. To enumerate, the following are some of the
activities incorporated into the program: Spiritual Leadership, Youth Mapping, Social Discovery
Walk, Creative Thinking, Communication and Personality Development, Immersion, Young
Citizens Forum, and Project Development and Implementation. I was one of the named scholars
to join YMA in its seventh season back in 2013. From that experience, I was able to capture the
bigger dream for Cebu. A lot of learning moments made me able to distinguish what things are
ethical or not.

The YMA leadership journey had saved me a lot of stage fright moments when I entered
college as an Accountancy student. It further led me to become one of the Accounting Interns of
the Aboitiz Power Corporation. I was able to truly appreciate the organization-wide action to
always choose what is moral and what is ethical. And as a part of the Accounting and Operations
Department handling a number of transactions every day, I got to see how each employee
possessed the greater vision of the company. Their culture can be described as something that is
well-grounded with integrity, excellence, and responsibility.

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Every aspect of their business processes which can be seen from the outside such as their
dealings with various clients and the like are reflective of their vision and mission. They also
value partnerships with stakeholders such as those we consider as micropreneurs. Indeed, in
Aboitiz Power Corporation and in the rest of the Aboitiz Group of Companies, I have seen the
point where the organizational goals and the personal goals of employees meet. And I cannot
deny that the results have brought a better change in the lives of the members of the society.

Up until today, the accountants employed in their company live up to the ethical
standards for professional accountants in the Philippines. Their accounting best practices such as
proper segregation of duties, and checks and balances are well implemented inside the company.
For me, there is no greater gift for an aspiring accountant like me to personally witness how
ethics can be applied in the day-to-day business operations, and to see what the authors of the
book said about having a clear purpose. Such purpose is, indeed, a standard that the public can
use to judge a business entitys decisions.

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