Ethics Case Dilemma

ETHICS CASE

Dilemma of an Accountant
In 1976 Senator Lee Metcalf (D-Mont.) released a
report on the public accounting industry which
rocked the profession. Despite a decade of revisions
in rules and regulations (variously established by the
Securities and Exchange Commission, Accounting
Principles Board, and Financial Accounting Standards
Board), public accounting firms were still perceived
by many on Capitol Hill as biased in favor of their
clients, incapable of or unwilling to police themselves,
and at times participants in coverups of
client affairs. Senator Metcalf even went so far as to
suggest nationalizing the industry in light of these
activities.
Just prior to the Metcalf report, Daniel Potter
began working as a staff accountant for Baker
Greenleaf, one of the Big Eight accounting firms. In
preparation for his CPA examination, Dan had rigorously
studied the code of ethics of the American
Institute of Certified Public Accountants (AICPA)
and had thoroughly familiarized himself with his
profession’s guidelines for morality. He was aware of
ethical situations which might pose practical problems,
such as maintaining independence from the
client or bearing the responsibility for reporting a
client’s unlawful or unreasonably misleading activities,
and he knew the channels through which a CPA
was expected to resolve unethical business policies.
Dan had taken the guidelines very seriously; they
were not only an integral part of the auditing exam,
they also expressed to him the fundamental dignity
every independent auditor was obligated to maintain
and calling of the profession—namely, to help sustain
the system of checks and balances on which capitalism
has been based. Daniel Potter firmly believed
that every independent auditor was obligated to
maintain professional integrity, if what he believed
to be the best economic system in the world was to
survive.
Thus, when Senator Metcalf’s report was
released, Dan was very... [continues]

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