Business Ethics and Corporate Governance — Practice

Question 1

Which ethical framework judges an action purely by its outcomes?

Accepted Answer

Consequentialism (utilitarianism).

Question 2

Name any two of the five fundamental principles of professional ethics.

Accepted Answer

Any two of: Integrity, Objectivity, Professional Competence and Due Care, Confidentiality, Professional Behaviour.

Question 3

Which threat arises when a professional reviews work they personally prepared earlier?

Accepted Answer

Self-review threat.

Question 4

A large client threatens to end its engagement with a firm unless the firm changes an unfavourable audit finding. Which threat does this illustrate?

Accepted Answer

Intimidation threat.

Question 5

Suggest a safeguard for a self-interest threat arising because an employee's spouse works at a company under that employee's direct financial evaluation.

Accepted Answer

Reassign the evaluation to another employee with no personal or financial connection to the company being evaluated, removing the conflicted individual from the decision entirely.

Question 6

Explain why 'tone at the top' matters for corporate governance beyond having a written code of conduct.

Accepted Answer

Employees calibrate their own ethical conduct substantially based on what leadership visibly tolerates, rewards or ignores in practice, not merely by what a written code states — a strong written code paired with weak or inconsistent leadership example is generally less effective at shaping actual behaviour than a genuinely visible, consistent ethical standard set by the board and senior management.

Question 7

A company's product is fully compliant with all applicable safety regulations, but internal testing shows it could be made meaningfully safer at modest extra cost. Analyse whether the company has an ethical obligation to make the improvement, using both a deontological and a virtue-ethics lens.

Accepted Answer

A deontological analysis focused narrowly on regulatory compliance might argue no further duty exists once the law's specific requirements are met. However, a virtue-ethics lens asks what a genuinely conscientious, safety-minded manufacturer would do when it knows of a modest-cost safety improvement it is capable of making, and would likely conclude that meeting only the legal minimum while knowingly forgoing an available, affordable safety gain falls short of the character a virtuous business would display, even though it breaches no specific rule.

Question 8

A cost accountant has audited the same manufacturing client's cost records for eight consecutive years and has become close personal friends with the client's owner. Identify the threat, explain why it is difficult to fully eliminate, and suggest the strongest available safeguard.

Accepted Answer

This is a familiarity threat, arising from the length and closeness of the relationship. It is difficult to fully eliminate because personal rapport built over eight years cannot simply be switched off by a single procedural step, and the accountant may not even be fully aware of how much it has softened their professional scepticism. The strongest available safeguard is mandatory rotation of the engagement (assigning a different cost accountant or engagement partner to the client after a defined maximum tenure), which removes the conflicted individual from the relationship entirely rather than attempting to manage a threat that has already become deeply personal.

Practice — Business Ethics and Corporate Governance

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