Question

Use the Ethical Reasoning Methods of egoism, enlightened egoism, act utilitarianism, rule utilitarianism, rights theory, justice, and virtue ethics discussed in Exhibit 1.3 in discussing each of the following questions regarding ethics expected of a CPA in the situations described.

1. CPAs conducting financial statement audits in the U.S. in the 1995 to 2005 period used Generally Accepted Accounting Principles (GAAP) that were based more on meeting minimal rules than on accounting principles. Which of the ethical reasoning bases would you say best explains this approach? Discuss why you chose this method and how this impacted auditors’ opinions on financial statements.

Answer 1

Ans. The concept of rights based ethics is that there are some rights, both positive and negative, that all humans have based only on the fact that they are human. These rights can be natural or conventional. That is, natural rights are those that are moral while conventional are those created by humans and reflect society's values.

The United States is founded upon a Rights Based Ethics System in which citizens are believed to have certain unalienable rights. John Locke was one of the primary supporters of this type of system as it takes the perspective of what the ideal world looks like and creates a rights system based upon those ideas.

(i) The United States of America's Bill of Rights is a document that epitomizes the type of rights that are embraced by Rights Based Ethical Systems.

(ii) The Univeral Declaration of Human Rights is another document that embraces and exhibits the values of a Rights Based Ethical System.