Question

Please read the italicized below and answer the questions that follow. Case study: Public Practice—Nobody Follows the Rule:

Public Practice - Nobody Follows the Rule

Prepared by W. Morley Lemon

Dave Gordon FCA, Senior Partner in one of the large public accounting firms, is in a quandary. He has just realized that, although he has followed the Ontario Institute of Chartered Accountants’ Rules of Conduct with respect to advising the incumbent auditor when he has been asked to undertake an assignment other than a financial statement audit from the incumbent’s client (and has always done so), that many of the other partners in his firm and, in fact, probably many partners in most of the larger firms are not following the rule. A particular concern to Dave is that several times the incumbent auditors of prospective clients have objected to his firm undertaking the work and have spoken to the client with the result that his firm was not retained. In short, his firm has lost business because he has followed the rule. Dave is preparing a memo to his partners and is puzzled as to what course of action his firm should follow. He has informally discussed the rule with his peers at the other larger firms and they have indicated that they feel the rule is not important and that they do not propose to change their firm policy with respect to it. On the other hand, he believes his firm has always prided itself on being a stickler for following the "letter of the law."

Dave Gordon, FCA, Senior Partner, is to advise the incumbent auditor on the financial situation at a client. He has been noticing that many of the other partners in his firm are not following the rules with respect to transitioning to a new client. Evaluate the above case study to access the ethical reasoning using Kohlberg’s stages of moral development from Dave Gordon’s point of view. Include in your evaluation:

What should Dave suggest to his fellow partners in the firm and why?

How can Dave make a decision using Kohlberg’s stages of moral development?

Could Dave see the moral justification of others in their decision to alter or not follow the rules?

Can Dave justify the loss of business as a right decision in view of firm goals?

Answer 1

What should Dave suggest to his fellow partners in the firm and why?

Dave should suggest to fellow partners to follow the rule of the land and do not go by the general practice in the market, this may be a cause of concern as clients are loosing out today but eventually whenever there will be a regulatory focus over the lapse, our firm will be in advantage.

How can Dave make a decision using Kohlberg’s stages of moral development?

Dave may make a decision using Kohlberg stages of moral development by looking at what is the effects of the pre-conventional, conventional, and post conventional stages of moral development of the course of the practice they are folllowing

Could Dave see the moral justification of others in their decision to alter or not follow the rules?

Yes Dave may see the moral justification as the firm is loosing out the business by not being flexible and following letter of the law strictly, their opinion to go with the flow can be seen justified.

Can Dave justify the loss of business as a right decision in view of firm goals?

The answer can be both yes or no.

Yes, as when they are following the rules strictly, they make a name with governmental agencies of being rule abiding firm which may give favorable/linient treatment at times.