NAME: Anne Marielle Pla Uy

Identification
1. is a situation a person faces in which a decision must be made about the appropriate behavior.
Answer: ETHICAL DILEMMA

2. refers to standards of moral conduct, behavior and judgment in business. It involves making the moral
and right decisions while engaging in such business activities as manufacturing and selling a product and
providing service to customers.
Answer: BUSINESS ETHICS

3. an example this unethical practice of business establishment is slack-fill packaging where containers like
cartons, tin cans and certain plastics are filled only up to eighty-five to ninety-five percent of their capacity.
Answer: DECEPTIVE PACKAGING

4. an unethical practice of debasing a pure or genuine commodity by imitating or counterfeiting it, by

adding something to increase its bulk or volume, or by substituting an inferior product for a superior one for
the purpose of profit or gain
Answer: ADULTERATION

5. an advertising that greatly exaggerates the virtues of a product and tells only half of the truth or else
sings praises to its nonexistent virtues
Answer: FALSE or MISLEADING ADVERTISING

6. is characterized by omitting adverse or unfavorable information about the product or service.

Answer: INDIRECT MISREPRESENTATION

7. the practice wherein sellers are using two sets of scales one which gives the correct weight and has been
sealed by the authorities and another which looks identical but registers more weight than the product.
Answer: WEIGHT UNDERSTATEMENT or SHORT WEIGHING

8. this unethical practice is found in selling situations where the price of the product depends on its length
such as selling cloth or textiles, electric cords or wires or on its volume such as selling rice by the sack.
Answer: MEASUREMENT UNDERSTATEMENT or SHORT MEASUREMENT

9. it is often practiced in selling situations where the product being sold is in such a shape or is packed in a
manner that would make counting the product difficult or inconvenient.
Answer: QUALITY UNDERSTATEMENT or SHORT NUMBERING

10. the practice of making false statements on the label of a product or making its container similar to a
well-known product for the purpose of deceiving the customer as to the quality and/or quantity of a
product being sold.
Answer: MISBRANDING or MISLABELING

11. the process of appealing to the emotions of a prospective customer and urging him to buy an item of
merchandise he needs.
Answer: PERSUASION
12. is a formal expression of the organization’s values and ethics.
Answer: CODE OF CONDUCT

13. it occurs when a broker or another person with access to confidential information uses that information
to trade in shares and securities of a corporation, thus giving him an unfair advantage over the other
purchasers of these securities.
Answer: INSIDER TRADING

14. arises when an employee who is duty bound to protect and promote the interest of his employer
violates this obligation by getting himself into a situation where his decision or actuation is influenced by
what he can gain personally from it rather that what his employer can gain from it.
Answer: CONFLICT OF INTEREST

15. a set of moral principles or values that govern the actions and decisions of an individual or group
Answer: ETHICS

16. is the abuse of private and public office for personal gain. It includes acts of bribery, embezzlement,
nepotism, kickbacks and state capture.
Answer: CORRUPTION

17. is a multisectoral campaign that seeks to institutionalize integrity standards among various sectors of
society – business, government, judiciary, academe, youth, civil society, church and media.
Answer: INTEGRITY INITIATIVE

18. it is often practiced by a person who holds directorial positions in two or more corporation that do
business with each other.
Answer: INTERLOCKING DIRECTORSHIP

19. The code adopted by the Professional Regulation Commission (PRC) and the 42 Professional Regulatory
Boards to cover an environment of good governance in which all Filipino professionals shall perform their
tasks. Answer: CODE OF GOOD GOVERNANCE FOR THE PROFESSION IN THE PHILIPPINES (E.O. No.220, June
23, 2003)

20. Under this concept, the seller is not obligated to reveal any defect in the product or service he is selling.
Answer: CAVEAT EMPTOR

Multiple Choice
1. Examples of direct misrepresentation about the product include the following except
a. False advertising
b. Deceptive packaging
c. Mislabeling
d. Caveat emptor
2. Examples of indirect misrepresentation about the product include the following except
a. Caveat emptor
b. Deliberate withholding adverse information
c. Business ignorance
d. False advertising
3. Examples of direct misrepresentation about the product include the following except
a. Adulteration
b. Short merging
c. Short measurement
d. Over persuasion
4. Interlocking directorship can be committed by
a. Rank and file employees
b. Members of the board of directors
c. Top executive officers
d. Middle-level managers
5. The following constitute unfair labor practices of an employer except
a. To restrain employees to form a union
b. To violate a collective bargain or agreement
c. To discriminate with regard to wages, hours of work
d. To terminate employment of employees found to have violated company policy or
employment contract
6. The following are examples of unethical practices of employees except
a. Acceptance of gifts from a customer in exchange for a favor that is detrimental to its interest of
his employer
b. Engagement in the same type of business as his employer
c. disclosure of confidential company information to someone else for personal gain
d. Application for a loan from his employer to settle personal liabilities
7. The following are examples of dishonest acts of an employee toward his employer except
a. Working overtime upon instruction of his supervisor
b. Bringing home office supplies for personal use
c. Overstating business trip expenses by submitting false receipts
d. Doing personal errands during office hours
8. Top management’s commitment in the “Unified Code of Conduct for Business” included the
following except
a. To lead by example in conducting business with integrity
b. To communicate within the company and the general public the company’s position against
bribery, corruption, and unethical practice.
c. To institute training programs or business ethics covering all levels of the organization.
d. To support strategy integrity practices and efforts and allocate sufficient resources for their
implementation
9. Among the commitments of the “Finance and Accounting Section of an organization” is
a. TO pay taxes in compliance with all laws
b. To have appropriate tools to receive, monitor and act on internal and external complaints of
employees
c. To communicate rules and guidelines or giving gifts, entertainment tokens of hospitality and
contributes to/from public or private organizations.
d. To prohibit contracting a third party to bribe or commit corrupt practices in behalf of the
company
 10. In the “Unified Code of Conduct for Business” the logistic department commits to do the following,
except
a. Not to penalize employees for refusing to pay bribes or facilitation payments even if it results in
failure to meet deadlines or revenue is lost
b. Not to tolerate any breaches or violation of existing laws in exchange for undue advantage and
unethical concessions a favor.
c. To pay correct duties and taxes based on transparent assessment of goods and services
d. To protect employees from retaliation when complaints are failed against them.

Using your own words, answer the following questions in well-composed sentences (at least 3 sentences).

1. What is the basic purpose of a code of ethics for a profession?

The basic purpose of a professional code of ethics is to provide members of a profession with
guidelines on how they maintain their professional attitude or behavior while carrying out their
duties. This will also serve as their outlines while handling big issues that needs to be addressed.
And allows you to know what is socially acceptable and how professionals should approach
problems.
2. Name and explain the characteristics and values associated with ethical behavior.
Integrity- Being a professional of integrity means consistently striving to be the best person you can
be in all your interactions with others. It means you practice what you believe is right based upon
reason. Person with integrity can stand against things that are not morally right.
Honesty - Honesty is an essential part of integrity. It means to tell the truth as you know it and don’t
hold back even when your words and actions may harm another. Telling the truth is better than
lying even when it is hard to do.
Trustworthiness and Promise Keeping - When you think of someone who is trustworthy, you
immediately think about the promises that person has made and kept. That's how most people
measure trustworthiness. Of course, keeping promises is much more than keeping appointments
and making your business goals. It means that your word is as good as gold.
Loyalty (Fidelity) and Confidentiality – Loyalty is about highlighting the importance of people’s
attention to the fact that behaving ethically is the right course of action. That may sound easy, but it
isn’t. Knowing how to do the right thing is something that must be learned.
Fairness and Openness - Fair persons manifest a commitment to justice, the equal treatment of
individuals, tolerance for and acceptance of diversity. They are open-minded and willing to admit
that they are wrong and, where appropriate, change their positions and beliefs. They do not
exercise indecent means to gain or maintain any advantage nor take undue advantage of another’s
mistakes or difficulties. 
Caring for others – This simply shows a person with care, compassionate and kind to others. Just like
what the Golden Rule said, help those in need, and seek to accomplish their business objectives in a
manner that causes the least harm and the greatest positive good. Having a harmonious relationship
with others can be able to do their assigned task much easier by helping each other.
Responsible Citizenship – It means engaging in behavior and making choices that give consideration
to how your actions impact others and their consequences for yourself and others. This will help us
to become knowledgeable and active citizen. And it enables us to see and understand issues from
different perspective.
 Pursuit of Excellence – Achieving excellence in the work that is carried out with good intention for
larger good of others is what makes organizations and its people a role model for others. In other
words, it provides success that is sustainable and fulfilling. Excellence is guided by individuals
intention to generate constructive outcomes towards the achievement of efficacy as well as
fulfillment in the performance of tasks.
Accountability - Your ability to be responsible and accountable is a direct result of the tasks you are
assigned and your personal work ethic when you take ownership of your work product. A person
who demonstrates accountability takes the hit if she doesn't complete the task on schedule. When
you refuse to be accountable, you'll place the blame on someone else for the project's failure.
Respect for others – It comes down to the Golden Rule says “Do unto others as you would have
them do unto you.” You should treat other people with kindness, courtesy and politeness. All people
you interact with should be treated equally.
3. What are some of the reasons why people act unethically? Explain.
The person’s ethical standards are different from those of society as a whole - Unethical choices are
more likely from people with different characteristics with different point of views and values.
Overwhelmingly, these people are driven by self-interest. They tend to manipulate others for their
own personal gain, fail to see the connection between their actions and outcomes, and believe that
ethical choices are driven by circumstance.
The person chooses to act selfishly - Of course, some people do not just do something wrong in a
weak moment or because they are not sure about what is the right thing to do. Some people know
exactly what they are doing and why. Self-interest, personal gain, ambition, and downright greed
are at the bottom of a lot of unethical activity in business.
4. Describe some principles and or values that are related to
a. Personal ethics
Respect for the right of others - Respecting someone does not always mean that
you're agreeing with someone, you're just waiting for a better time and place to address certain
actions and behaviors. Asking questions to better understand behaviors is better than jumping to
conclusions on your personal interpretation.
Concern for the right of others. Being nice to someone in a fair and reasonable way that lets that
person or persons know that you care about them and also lets them know that you think
they're important and valuable. 
b. Professional ethics
Confidentiality – As a professional, protecting confidential information is important. If you're in a
position where you have access to or are given this type of data at work, your career relies on
your ability to keep patient or client confidentiality. If you don't, you could lose trust and
integrity in the eyes of your existing (and potential future) clients, who could terminate your
contract and take legal action against you.
Professional Behavior - Being a professional requires more than wearing a nice suit. It requires
ethical behavior that drives interactions with other employees, customers and leadership. It
also guides how someone performs her job. 
c. Business Ethics
Concern for environment- The environment is everything we depend on. Whether it be the trees
that give us oxygen, the land we live upon and the rivers that provide us with water. The
environment is crucial for the society and businesses together. 
Social responsibility - Social responsibility involves walking a fine line between conservation and
consumer demand. Balancing environmental responsibilities with economic considerations is not
an easy task, but it's one that many corporations are struggling with well into the 21st century.
 When it comes to social responsibility, businesses and corporations should not only take care of
their stockholders, but also be able to benefit society in some way. 
5. Explain why ethical behavior is necessary in the practice of one’s profession.
Our actions affect not only ourselves, but also those around us. Many of our professional decisions
involve ethics. If we tell a lie, we can lose someone’s trust and undermine our own integrity.
6. What is the main objective of observing ethical behavior in business?
The main objective of the business ethics is to help the business itself by giving guidelines in their
workers that will serves as their basis when making a decision. This will also help not just by making
decision but also how to stay professional. Having an adequate knowledge will definitely leads us to
the right decisions we make.
7. Explain the economic impact of observing business ethics.
Businesses must maintain proper accounting procedures, provide all relevant information about the
performance of the firm to investors, and to protect the owner’s rights and investments. In relation
with employees, businesses are expected to provide a safe workplace, pay employees adequately
for their work, and treat them fairly.
8. Explain how business managers could act ethically.
The role of managers calls for ethical leadership. As managers, you should set a framework that will
help you responsibly make the right decision when faced with an ethical dilemma. You should be
able to reason through ethical decisions, just as they would reason through any managerial problem
facing them.
9. Describe the inherent conflict between ethics and pursuit of profit.
 Many businesses have gained a bad reputation just by being in business. To some people,
businesses are interested in making money, and that is the bottom line. It could be called capitalism
in its purest form. Making money is not wrong in itself. It is the manner in which some businesses
conduct themselves that brings up the question of ethical behavior.
10. What does “caveat emptor” mean?
It is a legal term implicitly involved in a sales transaction, where the buyer has the unilateral
responsibility to research the product or service properly to make sure it fits all his requirements.
Any difference between expectations and actual result can’t be blamed on the seller, according to
this principle. This is a rule that normally applies in free market transactions, with the exception of
illegal situations where the seller has acted in bad faith against the customer’s interest.
11. What is “interlocking directorship” and why could it lead to unethical actions of a member of the
board of directors?
Interlocking directorship were outlawed in specific instances wherein they gave a few board
members outsized control over an industry. In some cases, this opened the door for them to
synchronize pricing changes, labor negotiations, and more. It does not prevent a board director from
serving on a client’s board.
12. What are some of the unethical practices that executive officers may be guilty of? Explain.
Having employees to do work unrelated to the business – The executives officers use their power to
do things that are in favor for them. Such as do personal things that are not covered in the employee’s
work. This simply shows an unethical practice on the part of the executive officer.
13. Why is there a special need for ethical behavior by professionals?
To maintain public confidence in the profession, and in the services provided by members of that
profession. The ethical requirements for CPAs are similar to the ethical requirements of other
professions. All professionals are expected to be competent, perform services with due professional
care, and recognize their responsibility to clients.

14. Describe an ethical dilemma. How does a person resolve an ethical dilemma?
 It is actually a situation wherein a person faces in which a decision must be made about the
appropriate behavior. There are many possible ethical dilemmas that one can face, such as finding a
wallet containing money or dealing with a supervisor who asks you to work hours without recording
them. The biggest challenge of an ethical dilemma is that it does not offer an obvious solution that
would comply with ethical norms, there must be an action coming from the companies with regards
to strict ethical standards for their employees.
15. What are some factors that contribute to the commission of corruption?
Corruption is strongly influenced by the low salaries of public administration employees, who are
therefore trying to improve their financial position by receiving bribes, and consequently the socio-
economic situation of the government officials also affects the phenomenon of corruption. What
makes us even more sad is that, the acts of graft and corruption or toleration with them are no
longer ordinarily viewed as sin, but are often considered as acts of cleverness (when uncaught) or
mistakes (when caught). It has become a way of life, something considered normal by many.
16. Give examples of how corruption can take place.
Corruption takes place in a wide variety of ways, which are normally concealed. The purpose of such
corruption may be for the personal benefit of the individual or for the benefit of her/his
organization. Concealing corruption such as by making of false statements or may be the use of false
documentation.
17. What are the purposes of the “Unified Code of Conduct for Business” as prepared by the Integrity
Initiative Movement?
1. It harmonizes existing ethical standards among business operating in the Philippines. It ensures that
different
market players adhere to the same rule of the game in order to create fair market conditions and
promote transparency in doing business.
2. the Code formally communicates the signatories’ commitment to upholding high standards of ethics in all
business transactions. It articulates the belief that securing profit at the expense of integrity is an
unacceptable and unsustainable way of conducting business and that measures have been taken to
enforce and cultivate integrity habits within the signatories’ respective organizations.
18. The Bishop-Businessmen’s Conference Philippines adopted the “Code of Ethics for the Philippine
Business”. Name at least three rationales for its adoption.
1. Seeks to express systematically and coherently the principles of business practices accepted and
professed by Philippine business at its best, and seeks to apply these to current and changing needs.
2. It is the hope that this Code will serve as a general stimulus to renew and develop or amend existing
standards, and that individual entities will expand and adopt it to the specific needs of their own
organizations.
3. Intended to be influential rather than coercive. It is hoped that individual entities will consciously
adopt and embrace it as a statement of principles and, having done so, will be unwilling to incur the
sanction of adverse public opinion through failure to live up to the Code
19. What is the nature of the “Integrity Initiative Movement” led by the Makati Business Club and the
European Chamber of Commerce of the Philippines?
It is a multisectoral campaign that aims to strengthen the ethical standards in every business. It
seeks to institutionalize the integrity standards for different sectors of society. Sectors such as
business, government, judiciary, academe, youth, civil society, church and media. Led by private
sector, the initiative aims to help the Philippines to get rid of the corruption that is happening in the
country.

20. Why should business organizations adopt a Code of Conduct?

 Code of conduct is a central guide and reference for employees in supporting day-to-day decision
making. A well written code clarifies organization’s mission, values and principles, linking them with
standards of professional conduct. The code should be used as a reference for day to day business
related to ethics within the organization

Frank Doran, a senior audit manager for Cruz and Santos, CPas, has recently been informed that the firm
plans to promote him to partner within the next year or two if he continues to perform at the same high-
quality level as in the past. Frank excels at dealing effectively with all people, including client personnel,
professional staff, partners, and potential clients. He has recently built a bigger home for entertaining and
has joined the city’s most prestigious golf and tennis club. He is excited about his future with the firm.
Frank has recently been assigned to the audit of Machine International, a large wholesale company that
ships goods throughout the world. It is one of Crus and Santos’ most prestigious clients. During the audit,
Frank determines that Machine International uses a method of revenue recognition called “bill and hold”
that has recently been questioned by the SEC. After considerate research, Frank concludes that the method
of revenue recognition is not appropriate for Machine International.

In discussing the matter with the engagement partner, she concludes that the accounting method has been
used for more than 10 years by the client and is appropriate, especially considering that the client does not
file with the SEC. The partner is certain that the firm would lose the client if the revenue recognition
method is found inappropriate. Frank argues that the revenue recognition method was appropriate in prior
years, but the new SEC ruling makes it appropriate in the current year.

Frank recognizes the partner’s responsibility to make the final decision, but he feels strongly enough to
state that he plans to follow the requirements and include a statement in the working papers that he
disagrees with the partner’s decision. The partner informs Frank that she is unwilling to permit such a
statement because of the potential legal implication. However, she is willing to write a letter to Frank
stating the she takes full responsibility for making the final decision if a legal dispute ever rises. She
concludes by saying, “Frank, partners must act like partners, not like loose cannons trying to make life
difficult for their partners. You have some growing up to do before I would feel comfortable with you as a
partner.”

Use the six-step approach to resolve the ethical dilemma.

I. Relevant Facts
Frank Doran has been informed that the firm he has been working for, the Cruz and Santos,
CPA’s, has a plan to promote him as one of the partners only if he continues to perform the same
high-quality level like he was doing in the past, At the present time, he is a senior audit manager in
the firm. Frank Doran is exceptionally good at dealing effectively with all people, including client
personnel, prof. staff, partners and potential clients. Recently, he has built a bigger home for
entertainment and he has joined the city’s most prestigious golf and tennis club. Knowing about the
plan of the partners for him, he is excited about his future with the firm.
Machine International, a large wholesale company ships goods throughout the world, one of
the most prestigious clients of Bright and Lorren, was recently assigned to Frank Doran for him to
audit the company. Throughout the audit, Frank determines that machine International uses a
method of revenue recognition called “bill and hold” that has recently been questioned by the SEC.
After thoughtful analysis, Frank decides that the method of revenue recognition is not appropriate
for Machine International.
In reviewing the subject with the engagement partner, she concludes that the accounting
method has been used for more than 10 yrs. By the Machine International and is appropriate,
especially considering that the client does not file with the SEC. the partner is definite that the firm
would lose the client if the revenue recognition method is found inappropriate. However, Frank
argues the revenue recognition was appropriate in prior years, but the new SEC ruling makes it
inappropriate in the present year.
Frank recognizes that the partner’s responsibility to make the final decisions, but he feels
strongly enough to state that he plans to follow the requirements and include a statement in the
working papers that he disagrees with the partner’s decisions. The partner informs Frank that she is
unwilling to permit such a statement because of the potential legal implications. However, she is
willing to write a letter to Frank that she takes full responsibility for making the final decision if a
legal dispute ever arises.
II. Ethical Issues
Is it ethical for Frank Doran to disagree with the partner’s decision about the audit report
that they will issue regarding Machine International or for him to not disclose his findings of
the violated rulings of the SEC by Machine International?
III. Who is affected and How is each Affected?
1. Frank Doran
- He can’t state that he disagrees with the decision of the partner
- They may lose the client if he pushes through with his opinion
- It may affect his future position in the firm
- It may have a negative result and a bad impression of the partners of the firm
- Attitude about the partner may be affected
- The impression of the other staff to him may be affected and they may see him as
someone who doesn’t recognize other’s opinion
2. Engagement Partner
- Her opinion may create audit risk
- They may lose the client if she will not push through with her opinion
- A misstatement is possible because of her opinion
- May not conclude the right assessment of the client’s financial report
- May create a misunderstanding of how they conclude their report because of her
attitude towards the other auditors
-
3. Cruz and Santos, CPA’s
- They may lose a big client
- Engagement partner may create misstatements about the audit report
- Partners may have barriers with each other and will create misunderstandings
because of different opinions
- Because of the attitude that an engagement partner will always or often say that
he/she will be responsible for their audit reports, some staff may not drive their fear
out and will be afraid or will not mind to open up their suggestions and opinions
4. SEC
- One of the rulings may be violated
- May not check the FS of the company and if they comply with their rulings since it
does not file to them
 5. Machine International
- May violate SEC rulings
- They may not correct their error of revenue recognition
- The financial information like AR and Sales may result in overstatement due to their
bill and hold revenue recognition
6. Users of Machine International FS
- Investors of the company may think that Machine International has always a big
amount of sales not knowing about its revenue recognition, which is the bill and hold
- The overstatements of the sales may become a major factor in the decision making of
the managers for the company and they may not make an appropriate decision for
their future plans with these unrealistic sales
IV. Frank Doran’s Alternative Solution
- As a senior audit manager, it is his duty to review the reports so he should always
make sure that his opinions were right and base on factual sufficient appropriate
evidence before making a conclusion.
- Notify the Machine International that their bill and hold revenue recognition is not
appropriate according to the new ruling of the Security and Exchange Commission.
- Advice the Machine International to follow the ruling of SEC, and change its revenue
recognition before it may review by others that their sales are not their official
currently sales as of the moment.
- If it is proven, that according to the sufficient appropriate evidence that the revenue
recognition of the Machine International was inappropriate, he should disagree with
the opinion of the engagement partner that the financial statements of the company
do not comply with the framework.
- If the engagement partner insists on her opinion and conclusion, given that the
Machine International’s financial statement was inappropriate wrong, he should
refuse to continue with the engagement.
- If, however, there is not much sufficient appropriate evidence that the financial
statements of the Machine International were inappropriately done, Frank Doran
should always look towards all possibilities and listen to the point of the engagement
partner.
V. Consequences of Each Alternative
- If he works according to the code of ethics of an auditor, it is highly likely for him to
make a conclusion that was based on facts and as a result, the audit report that will
be attached to the financial statement will have a high assurance.
- If Machine International will have knowledge that its revenue recognition was made
inappropriately, they may either choose between to right their sales or to continue
with their bill and hold, however, the company’s response to the auditor’s advice is
unknown and as a big client, there will be a big risk that Cruz and Santos, CPAs will
lose their big client if the Machine International doesn’t like the intention of the
auditors to correct their wrongdoings.
- The engagement partner may ask him to just agree that the revenue recognition of
the Machine International as appropriate, however, he may also be responsible when
a legal dispute arises.
- Frank Doran may not be able to perform the audit and he will not be able to correct
the misstatement of the client's financial statement and financial information.
- He may not be able to become a partner in a year or two if he continues to disagree
with the engagement partner.
VI. Appropriate Action
Frank Doran is the one that will choose whether which action for him is ethical and
which appropriate decision he will make that fall everything into its rightful places. Because
personally, I think one may be unethical for others but it is ethical for another person.
However, as an auditor, I think it is always right to know the code of ethics that must be
followed not only by professional accountants but even the external and other auditors. I
think it is only right for Frank Doran to write a report stating his findings and conclusion
about the financial report of Machine International. Because it is not just for his own sake-
when there will be a legal dispute that will arise- but rather for all the stockholders,
stakeholders, and other interested parties that will use the financial statements of the
company to know about the doings of Machine International, as it is crucial in their decision
making. Furthermore, in making his decision, he should also consider all the factors that may
affect their firm because he carries it with him as a senior audit manager, together with his
staffs in the team, they all should check every little detail to come up with an appropriate
conclusion that is rightly based on sufficient appropriate evidence.