1. Stanley E. Jenne, Ph.D., CPA, CFE
Ethics
Stanley E. Jenne, Ph.D., CPA, CFE
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2. Today’s Presentation Codes of Ethics
Consider three approaches to ethics
An approach to resolving ethical dilemmas
Hypothetical scenarios
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3. Ethics – Hallmark of Professions
Professions are held to a high standard
Largely self-governing
Expected to serve the public interest
Auditing is considered a profession
Many certifications are available
Most sponsoring organizations have a code of ethics
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4. Auditor Ethical Expectations
Integrity
Objectivity
Independent mental attitude
Professional competence
Confidentiality
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5. Three Approaches to Ethics
Categorical Imperative
Utilitarian Principle
Generalization Argument
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6. Categorical Imperative
Attributed to Immanuel Kant
Moral requirements are based on rational standards
All people should act in accordance with moral laws
Moral laws do not consider the outcome of one’s actions
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7. Kant Quote
“May you live your life as if the maxim of your actions were to become universal law.”
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8. Utilitarian Principle
Decisions should consider the consequences
The morally correct course of action is the one that results in the most good
Utilitarianism maximizes the good of all concerned as opposed to self-maximizing egoism
Everyone’s happiness or welfare counts
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9. Generalization Argument
Asks the questions
What if everyone acted the way I wish to act?
Would it produce the best outcome for society?
Similar to Rule Utilitarianism
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10. Cases Robin Hood Steal from the rich and give to the poor. Motor Home
Purchasing motor home in another state to avoid sales tax.
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11. Ethics and the Law
The law provides a standard to judge right from wrong.
Laws generally set minimal standards.
Ethical considerations typically go beyond legal requirements.
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12. If only the choices were this clear!
Ethics deals with moral duties.
Ethical dilemmas exist when moral duties conflict.
How do we resolve ethical choices?
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13. Sources of Guidance The law Employer policies & Code of Conduct
Codes of Professional Ethics
Other relevant professional codes
Colleagues
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14. Approach From CFE Self-study
Determine the facts at issue.
Identify the alternative courses of action.
Evaluate the ethical problem.
Select a course of action.
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Ethical Theory for Fraud Examiners: ACFE.com

15. Ethics Case #1 Skimming scheme
Not the reason for your fraud investigation
Jane skimmed receipts to make mortgage payments while husband was ill.
Home was saved, husband returned to work
Jane already had begun repaying the theft
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16. Ethics Case #2 Internal auditors under cover Assuming a false identity
Fabricating cover stories
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17. AICPA Code of Ethics Revision
Effective December 2014
Clarifies which rules apply to different types of engagements.
Includes a conceptual framework
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18. Steps of the AICPA Conceptual Framework
Identify Threats
Step 2
Evaluate Threats
Step 3
Identify Safeguards
No Threats Proceed
Threats not Significant Proceed
Existing
New
Threats
Not Acceptable
Level…Stop
Step 4 Evaluate
Safeguards
Threats at Acceptable Proceed

19. Conclusion Ethical conduct is important in fraud examination
Correct choices are not always clear
Philosophers and professional organizations give guidance
Don’t go it alone – seek help
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