Ethical Obligations and Decision Making in Accounting, 4/e 1
Case 1-8 Shifty Industries
Shifty Industries is a small business that sells home beauty products in the San Luis Obispo,
California, area. The company has experienced a cash crunch and is unable to pay its bills on a
timely basis. A great deal of pressure exists to minimize cash outflows such as income tax
payments to the Internal Revenue Service (IRS) by interpreting income tax regulations as
liberally as possible.
Questions
1. What values are most important to you in deciding on a course of action? Why?
As an accounting professional, the important values are to place the public interest ahead
of all other interests, make decisions objectively, exercise due care in the performance of
professional services, and act with integrity. A tax professional does not have to be
2. Who are the stakeholders in this case and how might they be affected by your
course of action?
The stakeholders include Shifty Industries (company), the employees, clients, creditors,
the IRS, and the taxpayers. The company wants to minimize cash outflows and show net
income. The reduction in cash outflows and improvement will help the company obtain
3. What would you do and why, assuming your approach will be based on the
application of the ethical reasoning methods discussed in the chapter?
The only things certain in life are death and taxes. As humans, we do not like either of
those things. However, taxes are generating revenue for the government to provide
services that we do appreciate, such as safety from fire, crime, attacks, trash pick-up,
roads, highways, bridges, dams, power, libraries, safety net for the elderly, poor and