Evil under the Son

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LP and Timothy Leung School of Accounting. Azusa Pacific University .... Ethical obligations and decision making in accounting: Text and Cases, 2nd. Edition.

Evil under the Son Financial misdeeds in the name of God John M. Thornton, PhD, CPA Leung Chair of Accounting Ethics LP and Timothy Leung School of Accounting Azusa Pacific University

Vision L.P. and Timothy Leung School of Accounting

“We will be a premier Christian Accounting School, recognized as a thought leader on accounting character and competence to reflect the life of Christ and shine the light of Truth.”

Case Dr. B, a professor at Admirable Protestant University, is planning a trip with a small group of students to Nigeria to provide food and educational aid to orphans. He needs to raise funding for travel to and from Nigeria, and approaches his cousin Ken, an upper level manager at Microsoft, to ask for support. Ken informs Dr. B that he is not interested in contributing, but that Microsoft has an employee matching fund where an employee may give up to $500 to a non-profit of their choice and the company will match the donation. If Dr. B gives cousin Ken $500, then Ken would be glad to donate it to APU, coupled with the Microsoft match, designating it for the mission trip. Dr. B planned agrees to do so, since he had planned to use at least $500 of his own money for the trip anyway. • Do you support Dr. B’s decision? • Why or why not?

The Fraud Triangle The Accidental Fraudster • Incentive/pressure – Unsharable financial need – Presumably self-serving – Generally unobservable

• Opportunity – Little fear of getting caught – Violates a position of trust

• Rationalization – Morally defensible rationalization – Generally unobservable

The Fraud Triangle The Predatory Fraudster • Criminal mindset – Substituted for incentive/pressure Opportunity Opportunity 

• Opportunity – same

• Arrogance – Substituted for rationalization

• “Because I can” v. “It just happened”

Fraud in a Governmental Setting • Political, rather than economic, incentive • Misuses entrepreneurial skills to exploit funding models to unjustly benefit their organization • Example: FTE manipulation at public university

The Accidental Fraudster in a Christian Organization • Incentive: Altruistic, rather than selfish • Opportunity: same • Rationalization: morally excellent end justifies the questionable means

Rest’s Model of Ethical Action • Moral Sensitivity – Ability to recognize ethical component to decision

• Moral Judgment – Identify what “ideally” ought to be done

• Moral Motivation – Willingness to place ethical values first

• Moral Character – Courage to act ethically, even at great personal cost

Daniel as Accounting Exemplar • Trustworthy, neither corrupt nor negligent • Humble • Likeminded friend • Knew God is sovereign over the kingdoms of men

Be Like Dan (Tune: Be a Man, from Mulan) http://www.youtube.com/watch?v=eGMN-gNfdaY 2:30

• Men: “Be like Dan!” • Women: “Who trusted God though his peeps were slaughtered” • Men: “Be like Dan!” • Women: “Who chose good friend for times would get hotter” • Men: “Be like Dan!” • Women: “Whose character made him lions’ fodder” • All: “Impervious to the dark side’s harpoons!”

Bibliography American Institute of Certified Public Accountants (AICPA). 2002. Considerations of fraud in a financial statement audit. Statement on Auditing Standards No. 99. AICPA, New York, NY. Carnes, T. October 27, 1997. Fraud: New Era's Bennett to Prison, Part 1. Christianity Today. http://www.christianitytoday.com/ct/1997/october27/7tc86a.html. -------. October 27, 1997. Testimony: Bennett Confesses 'Dream' Became 'Delusion'. Christianity Today. http://www.ctlibrary.com/ct/1997/october27/7tc090.html Dormniney, J. W., Fleming, A. S., Kranacher, M. J., and Riley, Jr., R. A. 2012. Financial fraud: A new perspective on and old problem. The CPA Journal, June, 61-65. Wilkens, S., and Kaak, P. 2012. Faith Integration: Getting if RIGHT. Presentation to the SBM Faculty, Azusa Pacific University, Azusa, CA. Kohlberg, L. 1979. The meaning and measurement of moral development. Clark University Press, Worcester, MA. Marks, J. 2010. Playing offense in a high-risk environment. Crowe Horwath, LLP. http://www.crowehorwath.com/ContentDetails.aspx?id=1561 Mintz, S. M. and Morris, R. E. 2011. Ethical obligations and decision making in accounting: Text and Cases, 2nd Edition. McGraw-Hill Irwin. New York, NY. Rest, J. R. 1983. Handbook of Child Psychology: Cognitive Development, Vol. 3, Series ed. P. H. Mussen and Vol. ed. J. Flavell. Wiley. New York, NY. 556-629. SEC. 1998. http://www.sec.gov/litigation/litreleases/lr15637.txt Stalebrink, O. J., and Sacco, J. F. 2007. Rationalization of financial statement fraud in government: An Austrian perspective. Critical Perspectives in Accounting (CPA), 18, 489-507. Thornton, J.M., and Ashley, N. W. 2012. Anatomy of an enrollment fraud. Research on Professional Responsibility and Ethics in Accounting, 16, 1-27. Thornton, J. M. Forthcoming. One Master: God on Money. Working paper, Azusa Pacific University, Azusa, CA. Thornton, J. M. 2012. Daniel as accounting exemplar. Public Interest Section Mid-Year Meeting, Orlando, FL. Wolfe, D. T., and Hermanson, D. R. 2004. The Fraud Diamond: Considering the four elements of fraud. The CPA Journal, http://www.nysscpa.org/cpajournal/2004/1204/essentials/p38.htm