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78.
In September 2015, Volkswagen disclosed it had sold hundreds of thousands of diesel cars
in the U.S. with software specifically designed to evade government pollution tests. The
company disclosed that the irregularities on diesel-emission readings extend to some 11
million vehicles globally. The company has admitted that it rigged diesel vehicles using a
“defeat device” to pass lab tests, even though they emitted as much as 40 times the legal
limit of pollutants on the road.
In November 2015, VW set a November 30 deadline for staff with knowledge about its
diesel emissions test cheating to come forward. Workers who get in touch with internal
investigators by then would be exempt from dismissal. VW said it would not sack workers
for what they might reveal, but they might be transferred to other duties. “Employees
covered by collective bargaining agreements who get in touch promptly, but no later than
November 30, 2015… and… may rest assured that the company will waive consequences
under labor law such as the termination of employment, and will not make any claim for
damages,” according to the letter sent to workers.
Evaluate VW’s actions from an ethical perspective.
Clearly, Volkswagen acted in an egoistic manner much like Ford, GM, and Toyota in other
auto product defect cases discussed.
79.
Tommy Hubbs is the new controller of XYZ Corporation. Recently, Hubbs was approached
by Carol Franks, the CFO, and told in no uncertain terms to record $100,000 in revenue at
the end of 2015 even though the sale was not made until January 3, 2016. Describe
Hubbs’s ethical responsibilities in this matter if he is a CPA?
80.
Tommy Hubbs is the new controller of XYZ Corporation. Recently, Hubbs was approached
by Carol Franks, the CFO, and told in no uncertain terms to record $100,000 in revenue at
the end of 2015 even though the sale was not made until January 3, 2016. Hubbs contacts
a good friend who used to be the controller of XYZ and is told the environment of the
company is one of loyalty at all costs. His friend shares that he left the company because
of differences on numerous accounting issues. The friend advises Hubbs to let it go this
one time to show he is a team player.
Assume Hubbs decides not to go along with Franks’ dictum. Prepare an outline to help
him give voice to his values and attempt to change hearts and minds of those in XYZ that
might block proper accounting.
Use the following to guide students on what is expected of them in answering this
question.
As you read the case, think about the following series of questions for the protagonist to
address after identifying the right thing to do including:
• How can they get it done effectively and efficiently?
• What do they need to say, to whom, and in what sequence?
• What will the objections or push-back be and, then?
• What would they say next? What data and examples do they need?
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81.
Is whistle-blowing a moral practice? How might you evaluate whether it is or is not?
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.
What causes auditors to make unethical decisions? Are these factors different across different
types of auditors?
