Tone at the Top, Ethics
Once upon a time, a major television news group rigged a major U.S. automaker’s truck to explode upon impact with another object. The news group was trying to demonstrate that the automaker had placed the gas tanks on the truck in a dangerous location. Many of these trucks’ gas tanks had exploded when the trucks were involved in accidents. However, the trucks that the news group were using for their production did not explode on contact, apparently. So the news group provided the gas tanks with some assistance by adding explosive materials, thus making the trucks go up in flames on impact with another object. According to newspaper reports of this incident, the president of the television network stated that the problem was not so much that it happened but that the news group got caught.
Required
What tone did the television network executive set when he stated that the problem was not so much that it happened but that the news group got caught?
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FUNDAMENTALS OF COST ACCOUNTING
- A fertilizer manufacturing company wants to relocate to Yellowstone County. A report from a fired researcher at the company indicates the company’s product is releasing toxic by-products. The company suppressed that report. A later report commissioned by the company shows there is no problem with the fertilizer.Should the company’s chief executive officer reveal the content of the unfavorable report in discussions with Yellowstone County representatives? Discuss.arrow_forwardPowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected Power Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed. Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant. “I didn’t know mud could smell so bad,” Paul says. “What should I be looking for?” “Don’t worry about beginning inventory numbers,” responds Stephen, “we’ll get them from last year’s annual report. We need first-quarter cost data.” “I was working on the first-quarter results just before the storm hit,” Paul says. “Look, my report is still in my desk drawer. All I can make out is that for the first quarter, material…arrow_forwardPowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected Power Switch’s facilities. Inventory was completely ruined, and the company’s computer system, including all accounting records, was destroyed. Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant. “I didn’t know mud could smell so bad,” Paul says. “What should I be looking for?” “Don’t worry about beginning inventory numbers,” responds Stephen, “we’ll get them from last year’s annual report. We need first-quarter cost data.” “I was working on the first-quarter results just before the storm hit,” Paul says. “Look, my report is still in my desk drawer. All I can make out is that for the first quarter, material…arrow_forward
- Which of the following provides the best example of a systematic risk event? Group of answer choices A strike by union workers hurts a firm's quarterly earnings Mad Cow disease in Montana hurts local ranchers and buyers of beef A pandemic caused by the coronavirus shuts down businesses across the globe A senior executive at a firm embezzles $10 million and escapes to South Americaarrow_forwardQ1. You are the PR officer of a major MNE in the chemicals industry. The national press in your home country alleges that your company is covering up an environmental disaster caused by your subsidiary in India,in which several people died. How do you react?arrow_forwardThe Australian Institute of Criminology (AIC) asserts that three factors can explain fraud. Which of the following is not considered as one of the factors asserted by the AIC? Pressure, opportunity, and rationalization Absence of effective and efficient internal controls Availability of suitable targets Supply of motivated and willing offenders All the above None of the above West Coast Baseball Association, Inc.’s, (WCBA) baseball stadium was destroyed by a tornado. WCBA and its insurance company disagreed on the amount to recover for the damages. As a result, you have been engaged as a forensic accountant to compute the amount recoverable for the damages after trial as an Exhibit to be presented in a court of law. However, based on negotiations, the litigants (WCBA and the insurance company) have agreed on the following cost elements: Projected earnings after trial, had the harmful event not occurred was $4,300,500 million Project earnings after the trial were $500,000…arrow_forward
- (Ethics)Rob Rote, the president and CEO of RRR Waste Management, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his hospitalization, RRR had experienced a sharp decline in its stock price, and trading activity became almost nonexistent. The primary reason for this was concern expressed in the media over a new untested waste management system implemented by the company. Mr. Rote had been unwilling to submit the procedure to testing before implementation, but he reluctantly agreed to limited tests after the system was operational. No problems have been identified by the tests to date.The other members of management called a meeting to determine what they should do. Randy Smith, the marketing manager, suggested that the company purchase a large number of shares of treasury stock. In that way, investors might notice that activity had picked up, and might decide to buy some more shares. This plan would use up most of the company's available…arrow_forwardA situation where a respected individual’s reputation was tarnished by personal decisions is the resignation of David Petraeus, former U.S. military general and head of the Central Intelligence Agency (CIA). On November 9, 2012, Petraeus resigned from the CIA after it was announced he had an extramarital affair with a biographer, Paula Broadwell, who wrote a glowing book about his life. Petraeus acknowledged that he exercised poor judgment by engaging in the affair. When Federal Bureau of Investigation (FBI) agents investigated the matter because of concerns there may have been security leaks, they discovered a substantial number of classified documents on her computer. Broadwell told investigators that she ended up with the secret military documents after taking them from a government building. No security leaks had been found. In accepting Petraeus’s resignation, President Obama praised Petraeus’s leadership during the Iraq and Afghanistan wars and said: “By any measure, through his…arrow_forwardDavid H. Brooks, a university graduate with an accounting degree and the former CEO of DHBIndustries, Inc., was charged in October 2007 with accounting and securities fraud for failing toreport the company’s inventory at the lower of cost or market. From 2001 to 2005, DHB purchasedlarge quantities of a material called Zylon and used it in making bulletproof vests that were sold tothe U.S. military and local law enforcement agencies. During this same period, DHB learned thatZylon deteriorated rapidly when exposed to light, heat, and body perspiration. DHB knew that oneof its competitors, Second Chance Body Armor, had stopped using Zylon in its vests and, eventually, discontinued its business because customer demand for its Zylon-based vests had evaporated.DHB did not write down its own inventory of Zylon and Zylon-based vests because it had a largecontract to supply the U.S. military with bulletproof vests. In its financial statements for the yearended December 31, 2004, DHB reported…arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeBusiness Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:CengageBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage