Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !

sen Uni"e#si $

Lesson notes Lesson 12: Internal Controls and Business Ethics

Learning objectives %&E'(lain he fun)amen al (#inci(les of in e#nal con #ol& *&Define, e'(lain he (u#(ose, an) i)en if$ he (#inci(les of in e#nal accoun in+ con #ol& ,&A((l$ in e#nal con #ol o cash& -&E'(lain an) #eco#) (e $ cash fun) #ansac ions& .&I)en if$ con #ol fea u#es& /&0#e(a#e a 1ank #econcilia ion 2&E'(lain he fun)amen al (#inci(les of in e#nal con #ol& Teaching hours S u)en s ma3o# in accoun in+4 - hou#s O he#s4 * hou#s

Teaching contents: 1. Opening story China A"ia ion Oil 5Sin+a(o#e6 Co#(&, an o"e#seas a#m of China7s main 3e !fuel su((lie#, #e"eale) he en) of *88- ha i has #acke) u( a1ou 9..8 million in #a)in+!#ela e) losses& 2. Define internal control Internal control is he o#+ani:a ional (lan an) all he #ela e) measu#es ha an en i $ a)o( s o 5%6 5*6 5,6 5-6 Safe+ua#) asse s, Encou#a+e a)he#ence o com(an$ (olicies, 0#omo e o(e#a ional efficienc$, an) Ensu#e accu#a e an) #elia1le accoun in+ #eco#)s&

Mana+emen has (#ima#$ #es(onsi1ili $ fo# he financial s a emen s& E'hi1i 2!% is an e'ce#( f#om he ;es(onsi1ili $ fo# Consoli)a e) Financial S a emen s of Lan)s< En)& E;M 3. Identify the characteristics of an effective system of internal control 5%6Com(e en , #elia1le, an) e hical (e#sonnel=A #ac o(!>uali $ em(lo$ees, #ain hem

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

?ell, an) su(e#"ise hem&

5*6Assi+nmen of #es(onsi1ili ies=Each em(lo$ee is assi+ne) ce# ain #es(onsi1ili ies 5of en )efine) in he o#+ani:a ional cha# 6&

5,60#o(e# au ho#i:a ion=An o#+ani:a ion +ene#all$ has a ?#i en se of #ules ha ou lines a((#o"e) (#oce)u#es& Tasks ha fall ou si)e his se of (#oce)u#es ma$ 1e (e#fo#me) onl$ if (#o(e#l$ au ho#i:e)&

5-6Se(a#a ion of )u ies=Di"i)in+ #es(onsi1ili ies fo# #ansac ions limi s he chances fo# f#au) an) (#omo es accu#ac$ of he accoun in+ #eco#)s& Se(a#a ion of )u ies ma$ 1e )i"i)e) in o fou# (a# s4

Se(a#a ion of o(e#a ions f#om accoun in+=The en i#e accoun in+ func ion shoul) 1e com(le el$ se(a#a e f#om o(e#a in+ )e(a# men s&

Se(a#a ion of cus o)$ of asse s f#om accoun in+=Accoun an s shoul) no ha"e access o asse s, an) hose ha ha"e access o asse s 5such as he cashie#6 shoul) no ha"e access o he accoun in+ #eco#)s&

Se(a#a ion of au ho#i:a ion of #ansac ions f#om he cus o)$ of #ela e) asse s=0eo(le ?ho au ho#i:e #ansac ions shoul) no han)le he #ela e) asse &

Se(a#a ion of )u ies ?i hin he accoun in+ func ion=Diffe#en (eo(le shoul) (e#fo#m he "a#ious (hases of accoun in+ o minimi:e e##o#s an) o((o# uni ies fo# f#au)&

5.6In e#nal an) e' e#nal au)i s=In e#nal an) e' e#nal au)i o#s i)en if$ ?eaknesses in in e#nal con #ol&

In e#nal au)i o#s a#e em(lo$ees& E' e#nal au)i o#s a#e em(lo$e) 1$ accoun in+ fi#ms ha a#e hi#e) 1$ a 1usiness o e'amine he financial s a emen s&

5/6Documen s an) #eco#)s=Business )ocumen s shoul) 1e (#enum1e#e) o call a en ion o a missin+ )ocumen &

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

526Elec #onic )e"ices an) com(u e# con #ols=Accoun in+ s$s ems a#e #el$in+ on he com(u e# o (e#fo#m 1asic func ions@ an) he#efo#e, (#o+#amme#s 1ecome he focus fo# in e#nal con #ols& Businesses use o he# elec #onic )e"ices o hel( (#o ec asse s an) con #ol o(e#a ions, such as in"en o#$ senso#s&

5A6O he# con #ols=Businesses of en use con #ols o (#o ec asse s such as fi#e(#oof "aul s 5 o (#o ec )ocumen s6, 1u#+la# ala#ms 5 o (#o ec (#o(e# $6, (oin !of!sale e#minals 5 o (#o ec cash6&

Fi)eli $ 1on)s insu#e he com(an$ a+ains hef 1$ an em(lo$ee& Man)a o#$ "aca ions an) 3o1 #o a ion enhances mo#ale an) hel(s kee( em(lo$ees hones &

5B6e!Comme#ce c#ea es some ne? #isks such as (#o ec ion confi)en ial info#ma ion&

%6Some (i falls inclu)e4 a&S olen c#e)i !ca#) num1e#s ha can 1e use) 1$ au ho#i:e) (eo(le& 1&Com(u e# "i#uses 5 ha #e(#o)uce hemsel"es6 an) T#o3an ho#ses 5 ha )o no #e(#o)uce6 a#e "icious (#o+#ams ha can )es #o$ o# al e# )a a an)Co# infec ?o#)!(#ocession files& c&Dacke#s can im(e#sona e le+i ima e 1usinesses on he ?e1 an) solici confi)en ial )a a f#om unsus(ec in+ (eo(le&

*6T?o s an)a#) echni>ues a#e use) o secu#e e!comme#ce )a a&

a&Enc#$( ion #ea##an+es e' messa+es 1$ some ma hema ical (#ocess so ha he messa+e canno 1e #ea) 1$ an$one ?ho )oes no kno? he (#ocess&

1&Fi#e?alls limi access o a local ne ?o#k 1$ 1lockin+ in #u)e#s& 5%86The#e a#e some limi a ions of in e#nal con #ol (#oce)u#es&

%6In e#nal con #ol s$s ems can 1e h?a# e) 1$ collusion 1e ?een ?o o# mo#e (eo(le ?o#kin+ o+e he# o )ef#au) he fi#m&

*6An o"e#l$ com(le' in e#nal con #ol s$s em ma$ 1e inefficien &

5%*6The 1ank accoun is a con #ol )e"ice 1ecause 1anks ha"e es a1lishe) (#ac ices fo# safe+ua#)in+ cash&

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

%6Banks (#o"i)e )e(osi o#s ?i h )e aile) #eco#)s of cash #ansac ions& These #eco#)s inclu)e4 a&A si+na u#e ca#), o ensu#e ha onl$ an au ho#i:e) (e#son has access o he accoun & 1&De(osi icke s, o main ain a #eco#) of amoun s )e(osi e)&

c&Checks, o main ain a #eco#) of monies ?i h)#a?n f#om he 1ank@ inclu)es he )a e of he check, he name of he (a$ee, an) he si+na u#e of he make#&

)&Bank s a emen s, o sho? he mon hl$ ac i"i $ in an accoun & Cancele) checks, checks ha ha"e clea#e) he 1ank, a#e usuall$ inclu)e) in he 1ank s a emen &

Elec #onic fun)s #ansfe# 5EFT6 a#e (a(e#less #ansac ions ha #ansfe# cash o o# f#om a 1ank accoun & The 1ank s a emen lis s EFT #ansac ions&

*6The 1ank #econcilia ion e'(lains he )iffe#ences 1e ?een he 1ank s a emen 1alance an) he +ene#al le)+e# 1alance of cash& 5E'hi1i 2!. illus #a es he Cash accoun &6 a&I ems #eco#)e) 1$ he com(an$ 1u no $e #eco#)e) 1$ he 1ank inclu)e4

De(osi s in #ansi =Mone$ ha has 1een )e(osi e) 1$ he com(an$ 1u no $e #eco#)e) 1$ he 1ank& Ou s an)in+ checks=Checks ha ha"e 1een issue) 1$ he com(an$ 1u no $e (ai) 1$ he 1ank&

1&I ems #eco#)e) 1$ he 1ank 1u no $e #eco#)e) 1$ he com(an$ inclu)e4 Bank collec ions=Mone$ collec e) 1$ he 1ank on 1ehalf of i s cus ome#s& Some com(anies use a lock!1o' s$s em ?he#e cus ome#s make (a$men s )i#ec l$ o he 1ank o #e)uce hef &

EFT=The 1ank s a emen ma$ inclu)e EFT<s ha he com(an$ has no $e #eco#)e)&

Se#"ice cha#+es=Fees ha he 1ank cha#+es fo# ce# ain se#"ices an) a#e no kno?n 1$ he )e(osi o# un il he 1ank s a emen is #ecei"e)&

In e#es #e"enue ea#ne) on he checkin+ accoun =The amoun of in e#es ea#ne) ma$ no 1e kno?n un il he 1ank s a emen is #ecei"e)&

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

Nonsufficien fun)s checks 5NSF6=NSF checks #ecei"e) f#om cus ome#s an) #e u#ne) o he (a$ee@ he$ a#e some imes inclu)e) in he 1ank s a emen

Checks collec e), )e(osi e), an) #e u#ne) o (a$ee 1$ he 1ank fo# #easons o he# han NSF= The 1ank ma$ #e u#n checks 1ecause he accoun has close), he check is oo ol), he si+na u#e is no au ho#i:e), he check has 1een al e#e), o# he check fo#m is im(#o(e#&

Check (#in in+ cha#+e=A fee ha he 1ank cha#+es fo# (#in in+ checks&

C&E##o#s ma$ 1e ma)e 1$ ei he# he 1ank o# he com(an$& 4. Prepare a bank reconciliation and the related journal entries 5%6The follo?in+ a)3us men s a#e ma)e o he 1alance (e# 1ank& 5E'hi1i 2!2 is an e'am(le of a 1ank #econcilia ion&6

Balance (e# 1ank EE

EE

A))4 De(osi s in #ansi EE Less4 Ou s an)in+ checks A)3us e) 1ank 1alance EE 5EE6

5*6The follo?in+ a)3us men s a#e ma)e o he 1alance (e# 1ooks&

Balance (e# 1ooks EE A))4 EFT #ecei( EE EE EE Bank collec ion In e#es #e"enue EE Less4 Se#"ice cha#+e EE NSF EE EFT (a$men EE Check (#in in+ cha#+e A)3us e) 1ook 1alance EE EE O he# 1ank cha#+es EE EE

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

5,6E##o#s ha a#e ma)e 1$ he 1ank a#e a)3us men s o he 1alance (e# 1ank& E##o#s ha a#e ma)e on he 1ooks a#e a)3us men s o he 1alance (e# 1ooks&

5-6A)3us in+ 3ou#nal en #ies a#e #e>ui#e) fo# e"e#$ a)3us men o he 1ook<s 1alance an) a#e illus #a e) 1elo?4

%6 Cash

Bank collec ion EE No es ;ecei"a1le In e#es ;e"enue EE EE

*6

In e#es #e"enue Cash EE In e#es ;e"enue EE

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

,6

Service charge Miscellaneous E'(ense Cash -6 NSF chec Accoun ;ecei"a1le Cash .6 EE EE EE EE

EFT!an EFT can 1e use) fo# "a#ious #ansac ions& The accoun , o he# han Cash, ha is in"ol"e) ?ill )e(en) on he si ua ion& "ecei#t $a%&ent Fa#ious Accoun s EE Cash EE EE

Cash EE Fa#ious Accoun s /6

An a)3us in+ en #$ fo# e##o#s is ma)e onl$ ?hen he e##o# affec s he 1ook si)e of he #econcilia ion&

5.6'(ners and &anagers of small 1usinesses )o no ha"e he lu'u#$ of se(a#a ion of )u ies& The 1ank #econcilia ion can 1e use) o hel( con #ol cash& . !pply internal controls to cash receipts 5%6Internal control over cash recei#ts ensu#es ha all cash is )e(osi e) an) ha he accoun in+ #eco#)s a#e co##ec & 5*60oin !of!sale e#minals 5cash #e+is e#s6 can (#o"i)e con #ol fo# cash recei#ts over the counter. %6The #e+is e# shoul) 1e (osi ione) so ha he cus ome# can see he amoun s en e#e)& *6A #ecei( shoul) 1e issue) fo# each sale #eco#)e) 1$ he #e+is e#& ,6The cash )#a?e# shoul) o(en onl$ ?hen he cle#k en e#s an amoun so ha all #ansac ions ?ill 1e #eco#)e) on he #e+is e# a(e& -6The me#chan)ise shoul) 1e (#ice) a Gune"enH amoun s o #e>ui#e ha he cle#k make chan+e f#om he cash )#a?e#& .6The cashie# shoul) )e(osi he cash, ?i h he #e+is e# a(e 1ein+ sen o he accoun in+ )e(a# men &

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

5,6A mail#oom em(lo$ee ?ho com(a#es he amoun of he check ?i h he #emi ance a)"ice shoul) han)le cash received in the &ail& %6The #emi ance a)"ices a#e fo#?a#)e) o he accoun in+ )e(a# men an) he checks a#e fo#?a#)e) o he cashie#& *6The con #olle# hen com(a#es he cash #ecei( s ?i h he con #ol a(e f#om he mail#oom, he 1ank )e(osi sli( f#om he cashie#, an) he )e1i o Cash f#om he accoun in+ )e(a# men & ,6Man$ com(anies use a lock!1o' s$s em o se(a#a e cash )u ies an) es a1lish con #ol o"e# #ecei( s& Cus ome#s sen) hei# checks )i#ec l$ o he 1ank& 5-6A Cash Short and 'ver accoun is use) o #eco#) sho# a+es o# o"e#a+es in he )ail$ cash sales& The 1alance of his accoun shoul) 1e small& ". !pply internal controls to cash payments )1*Internal control over cash #a%&ents is a leas as im(o# an as con #ollin+ cash #ecei( s& )2*Chec s a#e an im(o# an con #ol 1ecause a check ac s as a sou#ce )ocumen an) #e>ui#es an au ho#i:e) si+na u#e& 5,6The #urchasing #rocess #e>ui#es he follo?in+ s e(s& %6 Sales )e(a# men (#e(a#es a #urchase re+uisition. *6 The (u#chasin+ )e(a# men loca es he me#chan)ise an) (#e(a#es a #urchase order.

,6 The su((lie# fills he o#)e#, shi(s he +oo)s, an) mails an invoice o he (u#chase#& -6 Ihen he +oo)s a##i"e, a receiving re#ort is (#e(a#e)& .6 The accoun in+ )e(a# men com1ines all he )ocumen s, checks hem fo# accu#ac$, an) fo#?a#)s his disburse&ent #ac et o he a((#o(#ia e office# fo# a((#o"al an) (a$men & /6 Befo#e (a$men , he )ocumen s shoul) 1e com(a#e) o ensu#e ha he 1usiness (a$s cash onl$ fo# he +oo)s o#)e#e) an) #ecei"e)& A voucher, a )ocumen ha au ho#i:es (a$men , is (#e(a#e)& 5-6Es a1lishin+ a #ett% cash ,und allo?s con #ol o"e# e'(en)i u#es oo small o (a$ 1$ check& Introduction to the Current Situations (How Do Those Ethic Issues Stand Out in Modern Business World?)

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

The#e is such an un(#ece)en e) sense of )is #us in he 1usiness communi $ o)a$, on he (a# of he Ame#ican (u1lic, (e#ha(s i is 1es o ask ?h$ he#e ?as such a le"el of #us in he le+al e hics of 1usiness )u#in+ he 1oom (e#io) of he %BB8s& Of cou#se, he escala in+ (#ofi s in"es o#s ?e#e #ea(in+ ma$ seem o 1e he main #easons fo# his mis(lace) #us an) confi)ence, 1u he#e ?as also a sense ha Ame#ican 1usiness ?as com(#ehensi1le an) amena1le o he o#)ina#$ in"es o#& The ?i)es(#ea) alle+a ions #e+a#)in+ insi)e# #a)in+ an) accoun in+ f#au), as ?ell as #e"ela ions ha co#(o#a ions such as En#on 5an) in)ee), man$ of he (oo#l$ concei"e) in e#ne 1om1 ?e1si e c#ea ions6 ?e#e in fac (#ofi a1le an) e' an onl$ on (a(e# ha"e c#ea e) a sense ha no one in he o#)ina#$ (o(ulace can ei he# un)e#s an) o# #us 1usiness ?i hou s(eciali:e) insi)e# info#ma ion an) a)"ice& ;e"ela ions of he a1use of e'ecu i"e (e#ks a T$co ha"e also a #ac e) he ?o#l)<s focus on he issues of 1usiness an) accoun in+ e hics& Some quotes from the cele rities A his momen , Ame#ica<s hi+hes economic nee) is hi+he# e hical s an)a#)s !!! s an)a#)s enfo#ce) 1$ s #ic la?s an) u(hel) 1$ #es(onsi1le 1usiness lea)e#s& Geo#+e I& Bush, Co#(o#a e ;es(onsi1ili $ s(eech Jul$ B, *88* The#e a#e ?o le"e#s o se a man in mo ion, fea# an) self!in e#es & Na(oleon B&

-hat does $"'FESSI'N.L .N/ .CC'0NTIN1 ET2ICS &ean to us3 The 1oom of he B87s has chan+e) he 1usiness en"i#onmen in ?a$s ha ?ill #e>ui#e a #esha(in+ of co#(o#a e lea)e#shi(& Financial scan)als an) ou !of!han) e'ecu i"e com(ensa ion )emons #a e no onl$ a la(se of e hics an) un(#ece)en e) +#ee), 1u also a )is)ain fo# he #ule of la?& Thus, he mos (#essin+ lea)e#shi( issue fo# o)a$ is ho? o ensu#e ha co#(o#a e office#s 1eha"e in an e hical manne#& Because in"es o#s an) c#e)i o#s (lace +#ea #eliance on financial s a emen s in makin+ hei# in"es men an) c#e)i )ecisions, i is im(e#a i"e ha he financial #e(o# in+ (#ocess 1e #u hful an) )e(en)a1le& Accoun an s a#e e'(ec e) o 1eha"e in an en i#el$ e hical fashion, an) his is +ene#all$ he case& To hel( insu#e in e+#i $ in he #e(o# in+ (#ocess, he (#ofession has a)o( e) a

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

co)e of e hics o ?hich i s license) mem1e#s mus a)he#e& In a))i ion, checks an) 1alances "ia he au)i (#ocess, +o"e#nmen o"e#si+h , an) he e"e# "i+ilan K(lain iff7s a o#ne$K all se#"e a "i al #ole in (#o"i)in+ a))i ional safe+ua#)s a+ains he e##an accoun an & If $ou a#e (#e(a#in+ o en e# he accoun in+ (#ofession, $ou shoul) )o so ?i h he in en ion of 1eha"in+ ?i h hono# an) in e+#i $@ if $ou a#e no (lannin+ o en e# he (#ofession, $ou ?ill come o e'(ec ha he accoun an s ?ho $ou hi#e an) en #us ?i h $ou# mos confi)en ial financial info#ma ion o ac in a com(le el$ e hical ?a$& T?o ke$ le+al s e(s ha mus 1e aken o #ees a1lish #us in he 1usiness communi $ u(on in"es o#s a#e limi in+ he a1ili $ of insi)e#s o (#ofi f#om insi)e# #a)in+ i(s an) +#ea e# accoun a1ili $ in he accoun in+ fiel)& CEO focuses on 1oos in+ he co#(o#a ion7s )ail$ sha#e (#ice o# concen #a es on 1uil)in+ lon+! e#m co#(o#a e "alue& Cu##en com(ensa ion (#ac ices encou#a+e no onl$ sho# ! e#m 1eha"io# 1u also (#omo e e'cessi"e #isk! akin+ an) a++#essi"e accoun in+ me ho)s ha o"e#s a e ea#nin+s o 1oos (a$& Le+isla ion is a leas #$in+ o ackle he accoun in+ i##e+ula#i ies issues cause) 1$ une hical e'ecu i"es& 0#esi)en Bush si+ne) in o la? he Sa#1anes!O'le$ Ac of *88* in Jul$& Functions and $ur#oses o, .ccounting Ethics No ma e# ho? man$ #e+ula ions a#e im(ose), une hical in)i"i)uals an) o#+ani:a ions ?ill fin) ne? an) inno"a i"e ?a$s o ci#cum"en hem& 0#ofessional an) accoun in+ e hics can )i#ec 1usiness (eo(le o a1i)e 1$ a co)e of con)uc ha facili a es, if no encou#a+es, (u1lic confi)ence in hei# (#o)uc s an) se#"ices& In he accoun in+ fiel), (#ofessional o#+ani:a ions such as he AIC0A, IMA, main ain an) enfo#ce a co)e of (#ofessional con)uc fo# (u1lic accoun an s& The$ #eco+ni:e he accoun in+ (#ofession7s #es(onsi1ili $ o (#o"i)e e hical +ui)elines o i s mem1e#s& The (u#(ose of e hics in 1usiness is o )i#ec 1usiness (eo(le o a1i)e 1$ a co)e of con)uc ha facili a es, if no encou#a+es, (u1lic confi)ence in hei# (#o)uc s an) se#"ices& In he accoun in+ fiel), he AIC0A main ains an) enfo#ces a co)e of (#ofessional con)uc fo# (u1lic accoun an s& The Ins i u e of Mana+emen Accoun an s 5IMA6 an) he Ins i u e of In e#nal Au)i o#s 5IIA6 also main ain a co)e of e hics& 0#ofessional accoun in+ o#+ani:a ions #eco+ni:e he accoun in+ (#ofession7s #es(onsi1ili $ o (#o"i)e e hical +ui)elines o i s mem1e#s& Can 'ne $erson 4a e . /i,,erence3 A Ja(anese (#o"e#1 s a es4 KThe #e(u a ion of a housan) $ea#s ma$ 1e )e e#mine) 1$ he con)uc of one hou#&K The ac ions of 3us one (e#son ha"e e"en chan+e) he cou#se of a na ion& E)?a#) E"e#e Dale ?#o e4 I am onl$ one& Bu s ill I am one& I canno )o e"e#$ hin+, Bu s ill I can )o some hin+@ An) 1ecause I canno )o e"e#$ hin+ I ?ill no #efuse o )o he some hin+ ha I can )o&

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

Su&&ar% o, This Lesson %& E hical issues ha"e 1ecome an un(#ece)en e) o(ic of 1usiness communi $ o)a$& *& The mos (#essin+ lea)e#shi( issue fo# o)a$ is ho? o ensu#e ha co#(o#a e office#s 1eha"e in an e hical manne#& ,& 0#ofessional an) accoun in+ e hics can )i#ec 1usiness (eo(le o a1i)e 1$ a co)e of con)uc ha facili a es, if no encou#a+es, (u1lic confi)ence in hei# (#o)uc s an) se#"ices& Case ,or '#en /iscussion 2'- /' 5'0 4E.S0"E S0CCESS3 A (o(ula# s o#$ #ecoun s a mee in+ ha ook (lace a he E)+e?a e# Beach Do el in Chica+o in %B*,& A en)in+ his mee in+ ?e#e nine of he #iches men in he ?o#l) a ha ime4 5%6 Cha#les Sch?a1, 0#esi)en of he ?o#l)7s la#+es in)e(en)en s eel com(an$@ 5*6 Samuel Insull, 0#esi)en of he ?o#l)7s la#+es u ili $ com(an$@ 5,6 Do?a#) Do(son, 0#esi)en of he la#+es +as fi#m@ 5-6 A# hu# Cu en, he +#ea es ?hea s(ecula o#@ 5.6 ;icha#) Ihi ne$, 0#esi)en of he Ne? Yo#k S ock E'chan+e@ 5/6 Al1e# Fall, mem1e# of he 0#esi)en 7s Ca1ine @ 526 Leon F#a:ie#, 0#esi)en of he Bank of In e#na ional Se lemen s@ 5A6 Jessie Li"e#mo#e, he +#ea es s(ecula o# in he S ock Ma#ke @ an) 5B6 I"a# L#eu+e#, hea) of he com(an$ ?i h he mos ?i)el$ )is #i1u e) secu#i ies in he ?o#l)& T?en $!fi"e $ea#s la e#, 5%6 Cha#les Sch?a1 ha) )ie) in 1ank#u( c$, ha"in+ li"e) on 1o##o?e) mone$ fo# fi"e $ea#s 1efo#e his )ea h& 5*6 Samuel Insull ha) )ie) "i# uall$ (enniless af e# s(en)in+ some ime as a fu+i i"e f#om 3us ice& 5,6 Do?a#) Do(son ?as insane& 5-6 A# hu# Cu en )ie) o"e#seas, 1#oke& 5.6 ;icha#) Ihi ne$ ha) s(en ime in Sin+!Sin+& 5/6 Al1e# Fall ?as #elease) f#om (#ison so he coul) )ie a home& 526 Leon F#ai:e#, 5A6 Jessie Li"e#mo#e, an) 5B6 I"a# L#eu+e# each )ie) 1$ suici)e& Measu#e) 1$ ?eal h an) (o?e# hese men achie"e) success, a leas em(o#a#il$& Makin+ a lo of mone$ ma$ 1e an acce( a1le +oal, 1u mone$ mos assu#e)l$ )oes no +ua#an ee a #ul$ successful life& Man$ (eo(le hink of fame an) fo# une ?hen he$ measu#e success& Do?e"e#, a some (oin in life, mos (eo(le come o #eali:e ha inne# (eace an) soul!)ee( sa isfac ion come no f#om fame an) fo# une, 1u ha"in+ li"e) a life 1ase) on in e+#i $ an) no1le cha#ac e#& 0#esi)en Lincoln (u i his ?a$4 GDono# is 1e e# han hono#s&H A a Con+#essional Dea#in+ on e hics in Jul$ *88*, T#ue Ca h$, foun)e# of Chik!Fil!A, >uo e) 0#o"e#1s **4%4 KA +oo) name is mo#e )esi#a1le han +#ea #iches@ o 1e es eeme) is 1e e# han sil"e# o# +ol)&K In he final anal$sis, li"in+ an hono#a1le life #eall$ is mo#e sa isf$in+ han fame an) fo# une& Do? )o $ou measu#e successM Su++es e) >ues ions4 %6 Iha e hic lessons can $ou infe# f#om his case s o#$M *6 Do? can an accoun an +i"e a ?ell!1alance) #ea men o he e hic issues in his o# he# (#ofessional (#ac icesM ,6 Iha is he #ela ionshi(5s6 1e ?een he e hic >uali $ an) he (#ofessional a1ili $ an) he ac ual (e#fo#mances of an accoun an M

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

*6 The en #$ o es a1lish he fun) is4 0e $ Cash EE Cash in Bank EE ,6 A #ett% cash tic et (henever a )is1u#semen is ma)e f#om (e $ cash& No 3ou#nal en #$ is ma)e a his ime& -6 Ihen he fun) is #e(lenishe), all (e $ cash (a$men s a#e #eco#)e) in a summa#$ en #$ such as he one illus #a e) 1elo?4 Office Su((lies EE 0os a+e E'(ense EE Deli"e#$ E'(ense EE Cash Sho# an) O"e# EE Cash in Bank EE #. $ake ethical judgments in business 5%6Mos la#+e com(anies ha"e a code o, ethics )esi+ne) o encou#a+e em(lo$ees o ac e hicall$& 5*6Accoun an s ?ho a#e mem1e#s of he AIC0A mus also a1i)e 1$ he !I"#! "ode of #rofessional Ethics$ Accoun an s ?ho a#e mem1e#s of he IMA mus also a1i)e 1$ he Standards of Ethical "onduct for Mana%ement !ccountants$ 5,6The follo?in+ f#ame?o#k, foun) in he /ecision 1uidelines6 is a +ui)e o makin+ e hical )ecisions& %6 De e#mine he fac s& *6 I)en if$ he e hical issues& ,6 S(ecif$ he al e#na i"es& -6 I)en if$ he (eo(le in"ol"e)& .6 Assess he (ossi1le ou comes& /6 Make he )ecision& 5-6E7ternal controls, such as I;S au)i s, loan a+#eemen s, U&S& la?s, also encou#a+e e hical 1eha"io#&