Conficts of Interest

ETH 557 Conficts of Interest

In a written response, answer the following questions each between 260 to 350 words from Ethics in Accounting: A Decision-Making Approach:

  • Chapter 11, Exercise 2
  • You have been retained to testify as a damages expert at a binding arbitration about the financial loss your client sustained when a supplier shipped it defective raw materials. Several days before the arbitration proceeding, you discovered that the arbitrator is a member of your country club who occasionally plays golf with you.
  • Do you have a conflict of interest in testifying under oath on behalf of your client?
  • Should you discuss this case with the arbitrator if you see him at the country club?
  • Does the arbitrator have a conflict of interest?

  • Chapter 11, Exercise 10
  • A CPA firm has been retained by a major corporation to analyze whether its bank overcharged it interest on a bank loan, in violation of Oregon usury laws that establish maximum interest rates. This same CPA firm has been retained by an Arkansas bank that has been accused by Arkansas state regulators of charging excessive interest on consumer loans. Does the CPA firm definitely have a conflict of interest?

  • Chapter 11, Exercise 29
  • Huang started a small CPA firm several decades ago when he immigrated to the United States. Now, he is the managing partner of the firm, which has grown to have 40 partners and over 90 professional staff members. One of Huang’s clients is Taiwan Western Bank, located in northern California. Many of Huang’s small business clients maintain their checking accounts there. Also, Huang has always had a good working relationship with executives at that bank. Many of the bank’s loan officers find Huang to be trustworthy, and some even call him “charming.” Because of his personal goodwill, Huang can often get his clients’ loan applications approved faster there than at other banks. Huang has been asked to serve on the bank’s Board of Directors. He has been assured that the Board meets only one night each month and that this position will not interfere with his duties as managing partner of his CPA firm. Huang has asked you to weigh the “pros and cons” for him of accepting the director position at the bank. What are your thoughts?