6
Business & Professional Ethics for
Directors, Execu ves &
Leonard J. Brooks and Paul Dunn
© 2027
Accountants, 10e
INSTRUCTOR GUIDE
Chapter 1—Ethics Expectations
Chapter Ques,ons .............................................................................................................. 3
Case Solu,ons .................................................................................................................... 7
Case Involving the Challenges of AI
AI Due Diligence & Responsibility (Ch. 1, pp. 41-42) ...................................................................... 7
Cases Involving Questionable Business Models
Shein Fast Fashion (Ch. 1, p. 42-43) ............................................................................................... 9
The Travails of Valeant PharmaceuKcal (Now Bausch Health) (Ch. 1, p. 43-45) .......................... 12
Valeant PharmaceuKcals vs. Coca-Cola – Which Business Model is Worse? (Ch. 1, p. 45-46) ..... 16
Cases Involving Improper Behavior
Buying & Selling Blood (Ch 1, p. 47) ............................................................................................. 23
Pedophile Priests in the Catholic Church (Ch. 1, pp. 47-48) ......................................................... 27
Sexual Abuse by a Penn State Football Coach (Ch. 1, pp. 48-49) ................................................. 30
Adver:sing & Sales Promo:on Cases
© 2027 1
, Tiger Woods: “Winning Takes Care of Everything” ( Ch. 1, p. 49) ................................................ 33
Should Porn Be Sold by Cell Phone Companies? (Ch. 1, pp. 49-50) ............................................. 35
Cases Involving Financial Transac:ons
Goldman Sachs & the Greek Veil (Ch. 1, pp. 50-51) ..................................................................... 38
Martha Stewart’s Lost ReputaKon (Ch. 1, pp. 51-54) ................................................................... 40
Cases Involving the Control of Informa:on
Google versus China (Ch. 1, p. 55-56) .......................................................................................... 45
China’s Tainted Baby Milk Powder: Rumored Control of Online News (Ch. 1, pp. 56-57) ........... 47
Cases Concerning the Environment
Nestlé Bodles Water in a California Drought (Ch. 1, p. 58) .......................................................... 52
Bhopal–Union Carbide (Ch. 1, pp. 59-60)..................................................................................... 54
Texaco in Ecuador (Ch. 1, pp. 60-62) ............................................................................................ 58
Product Safety Cases
The Right to Be Informed? The Link Between Talcum Powder & Cervical Cancer
(Ch. 1, pp. 63-64) .......................................................................................................................... 61
J & J Dances the Texas Two-Step (Ch. 1, pp. 64-65) ...................................................................... 63
The Betaseron Decision (A) (Ch. 1, p. 65-66) ................................................................................ 65
MagneKc Toys Can Hurt (Ch. 1, p. 67) .......................................................................................... 68
Bausch & Lomb’s Hazardous Contact Lens Cleaner ( Ch. 1, pp. 67-68) ....................................... 70
Accoun:ng & Audi:ng Cases
Where Were the Accountants? (Ch. 1, pp. 68-69) ....................................................................... 73
Resign or Serve? (Ch. 1, pp. 69-70) .............................................................................................. 75
© 2027 2
, CHAPTER QUESTIONS
1. Why have concerns over pollu2on become so important for management and directors?
Concerns over pollu0on have intensified because stakeholders now understand that environmental
resources are finite and that corporate ac0vi0es can impose severe harms on communi0es and ecosystems.
Chapter 1 explains that this awareness has driven the development of interna0onal standards and
commitments thereto, tougher environmental laws, heightened penal0es (including personal liability for
directors), cross-border li0ga0on exposure for pollu0on on foreign soil, and reputa0onal scru0ny. Pollu0on
and perceived environmental indifference directly erode trust, social license, and access to capital, making
responsible environmental management a core governance and strategic issue rather than a peripheral cost.
2. Why are we more concerned now than our parents were about fair treatment of employees?
Public concern about fair treatment has grown as civil rights, feminist, labor, disability, and human rights
movements have reshaped norms around equality and dignity at work. Chapter 1 notes that this heightened
moral sensi0vity, amplified by media and stakeholder ac0vism, has increased expecta0ons that organiza0ons
prevent discrimina0on and harassment, provide safe and respecHul workplaces, and treat employees as key
stakeholders whose rights and voices must be taken seriously.
3. What could professional accountants have done to prevent the development of the credibility gap and the
expecta2ons gap?
The credibility and expecta/ons gaps emerged when confidence in corporate repor0ng and audits thereon
failed to live up to the public’s expecta0ons due to repeated financial scandals and failures in professional
skep0cism. Professional accountants could have mi0gated these gaps by more consistently asser0ng
independence, resis0ng aggressive or misleading repor0ng, communica0ng concerns more transparently,
and priori0zing their public-interest mandate over client or employer pressure. Chapter 1’s discussion of past
fact-finding commissions and key cases illustrates that stronger ethical stances and clearer communica0on
about risks and limita0ons of assurance would have strengthened public trust in financial repor0ng and the
profession.
4. Why might ethical corporate behavior lead to higher profitability?
Ethical corporate behavior reduces exposure to fines, lawsuits, clean-up and remedia0on costs, regulatory
sanc0ons, and reputa0onal crises that can destroy value. Chapter 1 links sustained profitability to
stakeholder trust: organiza0ons that manage environmental, social, and governance responsibili0es credibly
are beMer posi0oned to retain customers, aMract and mo0vate employees, secure investment, and access
emerging markets for responsible products and services. Ethical conduct is framed not as philanthropy, but
as a condi0on for durable compe00ve advantage.
5. Why is it important for the clients of professional accountants to be ethical?
The accuracy of the audit/assurance func0on depends largely on clients’ honesty and coopera0on. Because
auditors do not test every transac0on and must rely on internal controls and representa0ons, unethical
clients who conceal informa0on, override controls, or mislead auditors undermine the reliability of financial
statements and the value of the audit opinion. Chapter 1 stresses that when clients lack integrity, public
confidence is damaged not only in the company but also in the accoun0ng profession associated with it.
© 2027 3
, 6. How can corpora2ons ensure that their employees behave ethically?
Chapter 1 emphasizes that ethical conduct is best secured through an ethical corporate culture, supported
by clear values, codes of conduct, and consistent demonstrated leadership behavior. Effec0ve measures
include explicit expecta0ons and apparent leadership support, ethics and compliance training, credible
repor0ng and whistleblower mechanisms, aligned incen0ves, and fair disciplinary processes. When senior
management and boards model integrity and back it with systems, ethical behavior becomes normal and
expected rather than excep0onal.
7. Why didn’t some corpora2ons protect women employees from sexual abuse before 2017–2019?
Failures to protect women employees have often reflected power imbalances, fear of retaliation, weak reporting
mechanisms, and a culture that prioritized key performers’ interests and short-term secrecy over safety,
accountability, and long-term reputational damage. As presented in Chapter 1, the #MeToo movement exposed
systemic misconduct and challenged patterns of silence, forcing organizations and professions to confront the
ethical and governance failures inherent in ignoring harassment and abuse and to recognize this as a breach of
duty to employees and the public. Before 2017, women’s complaints about harassment, or worse, were
customarily dismissed. But public sentiment has now changed, thanks to the efforts of #MeToo and shocking
court cases involving Bill Cosby and Harry Weinstein, and women’s concerns are now taken quite seriously.
8. Should execu2ves and directors be sent to jail for the acts of their corpora2on's employees?
Yes. Execu0ves and directors are responsible for establishing effec0ve controls, promo0ng an ethical culture,
and responding to warning signs. Chapter 1 suggests that where leaders are negligent and knowingly permit,
encourage, or recklessly disregard wrongdoing, or fail to exercise basic due diligence, personal legal
consequences may be appropriate and necessary to reinforce accountability. This reflects an expecta0on
that ethical governance and oversight are expected du0es.
9. Why are the expecta2ons of a corpora2on’s stakeholders important to the reputa2on of the corpora2on
and to its profitability?
Stakeholder expecta0ons define what is considered legi0mate and acceptable corporate behavior. Chapter 1
explains that mee0ng expecta0ons related to honesty, reliability, fairness, environmental responsibility, and
responsiveness sustains reputa0on, trust, and ongoing support from customers, employees, investors,
regulators, and communi0es. When expecta0ons are breached, stakeholders can withdraw support, impose
sanc0ons, or mobilize public and poli0cal pressure, directly threatening profitability and long-term viability.
10. How can a corpora2on show respect for its stakeholders?
Respect is demonstrated when the corpora0on recognizes stakeholders’ legi0mate interests and
incorporates them meaningfully into decisions that affect them. Chapter 1 highlights transparent
communica0on, responsiveness to concerns, and efforts to avoid unjustly imposing risks or harms on
vulnerable or voiceless groups as markers that stakeholder interests are treated as real constraints and
considera0ons, not as mere public rela0ons language.
11. How can conflicts between the interests of stakeholders be resolved by a corpora2on’s management?
Chapter 1 recommends addressing stakeholder conflicts through sensi0vity, fairness, and clarity about the
reasoning behind decisions. Management should strive to understand each stakeholder’s perspec0ve,
consider the rela0ve importance and legi0macy of compe0ng claims, seek op0ons that minimize avoidable
© 2027 4
Business & Professional Ethics for
Directors, Execu ves &
Leonard J. Brooks and Paul Dunn
© 2027
Accountants, 10e
INSTRUCTOR GUIDE
Chapter 1—Ethics Expectations
Chapter Ques,ons .............................................................................................................. 3
Case Solu,ons .................................................................................................................... 7
Case Involving the Challenges of AI
AI Due Diligence & Responsibility (Ch. 1, pp. 41-42) ...................................................................... 7
Cases Involving Questionable Business Models
Shein Fast Fashion (Ch. 1, p. 42-43) ............................................................................................... 9
The Travails of Valeant PharmaceuKcal (Now Bausch Health) (Ch. 1, p. 43-45) .......................... 12
Valeant PharmaceuKcals vs. Coca-Cola – Which Business Model is Worse? (Ch. 1, p. 45-46) ..... 16
Cases Involving Improper Behavior
Buying & Selling Blood (Ch 1, p. 47) ............................................................................................. 23
Pedophile Priests in the Catholic Church (Ch. 1, pp. 47-48) ......................................................... 27
Sexual Abuse by a Penn State Football Coach (Ch. 1, pp. 48-49) ................................................. 30
Adver:sing & Sales Promo:on Cases
© 2027 1
, Tiger Woods: “Winning Takes Care of Everything” ( Ch. 1, p. 49) ................................................ 33
Should Porn Be Sold by Cell Phone Companies? (Ch. 1, pp. 49-50) ............................................. 35
Cases Involving Financial Transac:ons
Goldman Sachs & the Greek Veil (Ch. 1, pp. 50-51) ..................................................................... 38
Martha Stewart’s Lost ReputaKon (Ch. 1, pp. 51-54) ................................................................... 40
Cases Involving the Control of Informa:on
Google versus China (Ch. 1, p. 55-56) .......................................................................................... 45
China’s Tainted Baby Milk Powder: Rumored Control of Online News (Ch. 1, pp. 56-57) ........... 47
Cases Concerning the Environment
Nestlé Bodles Water in a California Drought (Ch. 1, p. 58) .......................................................... 52
Bhopal–Union Carbide (Ch. 1, pp. 59-60)..................................................................................... 54
Texaco in Ecuador (Ch. 1, pp. 60-62) ............................................................................................ 58
Product Safety Cases
The Right to Be Informed? The Link Between Talcum Powder & Cervical Cancer
(Ch. 1, pp. 63-64) .......................................................................................................................... 61
J & J Dances the Texas Two-Step (Ch. 1, pp. 64-65) ...................................................................... 63
The Betaseron Decision (A) (Ch. 1, p. 65-66) ................................................................................ 65
MagneKc Toys Can Hurt (Ch. 1, p. 67) .......................................................................................... 68
Bausch & Lomb’s Hazardous Contact Lens Cleaner ( Ch. 1, pp. 67-68) ....................................... 70
Accoun:ng & Audi:ng Cases
Where Were the Accountants? (Ch. 1, pp. 68-69) ....................................................................... 73
Resign or Serve? (Ch. 1, pp. 69-70) .............................................................................................. 75
© 2027 2
, CHAPTER QUESTIONS
1. Why have concerns over pollu2on become so important for management and directors?
Concerns over pollu0on have intensified because stakeholders now understand that environmental
resources are finite and that corporate ac0vi0es can impose severe harms on communi0es and ecosystems.
Chapter 1 explains that this awareness has driven the development of interna0onal standards and
commitments thereto, tougher environmental laws, heightened penal0es (including personal liability for
directors), cross-border li0ga0on exposure for pollu0on on foreign soil, and reputa0onal scru0ny. Pollu0on
and perceived environmental indifference directly erode trust, social license, and access to capital, making
responsible environmental management a core governance and strategic issue rather than a peripheral cost.
2. Why are we more concerned now than our parents were about fair treatment of employees?
Public concern about fair treatment has grown as civil rights, feminist, labor, disability, and human rights
movements have reshaped norms around equality and dignity at work. Chapter 1 notes that this heightened
moral sensi0vity, amplified by media and stakeholder ac0vism, has increased expecta0ons that organiza0ons
prevent discrimina0on and harassment, provide safe and respecHul workplaces, and treat employees as key
stakeholders whose rights and voices must be taken seriously.
3. What could professional accountants have done to prevent the development of the credibility gap and the
expecta2ons gap?
The credibility and expecta/ons gaps emerged when confidence in corporate repor0ng and audits thereon
failed to live up to the public’s expecta0ons due to repeated financial scandals and failures in professional
skep0cism. Professional accountants could have mi0gated these gaps by more consistently asser0ng
independence, resis0ng aggressive or misleading repor0ng, communica0ng concerns more transparently,
and priori0zing their public-interest mandate over client or employer pressure. Chapter 1’s discussion of past
fact-finding commissions and key cases illustrates that stronger ethical stances and clearer communica0on
about risks and limita0ons of assurance would have strengthened public trust in financial repor0ng and the
profession.
4. Why might ethical corporate behavior lead to higher profitability?
Ethical corporate behavior reduces exposure to fines, lawsuits, clean-up and remedia0on costs, regulatory
sanc0ons, and reputa0onal crises that can destroy value. Chapter 1 links sustained profitability to
stakeholder trust: organiza0ons that manage environmental, social, and governance responsibili0es credibly
are beMer posi0oned to retain customers, aMract and mo0vate employees, secure investment, and access
emerging markets for responsible products and services. Ethical conduct is framed not as philanthropy, but
as a condi0on for durable compe00ve advantage.
5. Why is it important for the clients of professional accountants to be ethical?
The accuracy of the audit/assurance func0on depends largely on clients’ honesty and coopera0on. Because
auditors do not test every transac0on and must rely on internal controls and representa0ons, unethical
clients who conceal informa0on, override controls, or mislead auditors undermine the reliability of financial
statements and the value of the audit opinion. Chapter 1 stresses that when clients lack integrity, public
confidence is damaged not only in the company but also in the accoun0ng profession associated with it.
© 2027 3
, 6. How can corpora2ons ensure that their employees behave ethically?
Chapter 1 emphasizes that ethical conduct is best secured through an ethical corporate culture, supported
by clear values, codes of conduct, and consistent demonstrated leadership behavior. Effec0ve measures
include explicit expecta0ons and apparent leadership support, ethics and compliance training, credible
repor0ng and whistleblower mechanisms, aligned incen0ves, and fair disciplinary processes. When senior
management and boards model integrity and back it with systems, ethical behavior becomes normal and
expected rather than excep0onal.
7. Why didn’t some corpora2ons protect women employees from sexual abuse before 2017–2019?
Failures to protect women employees have often reflected power imbalances, fear of retaliation, weak reporting
mechanisms, and a culture that prioritized key performers’ interests and short-term secrecy over safety,
accountability, and long-term reputational damage. As presented in Chapter 1, the #MeToo movement exposed
systemic misconduct and challenged patterns of silence, forcing organizations and professions to confront the
ethical and governance failures inherent in ignoring harassment and abuse and to recognize this as a breach of
duty to employees and the public. Before 2017, women’s complaints about harassment, or worse, were
customarily dismissed. But public sentiment has now changed, thanks to the efforts of #MeToo and shocking
court cases involving Bill Cosby and Harry Weinstein, and women’s concerns are now taken quite seriously.
8. Should execu2ves and directors be sent to jail for the acts of their corpora2on's employees?
Yes. Execu0ves and directors are responsible for establishing effec0ve controls, promo0ng an ethical culture,
and responding to warning signs. Chapter 1 suggests that where leaders are negligent and knowingly permit,
encourage, or recklessly disregard wrongdoing, or fail to exercise basic due diligence, personal legal
consequences may be appropriate and necessary to reinforce accountability. This reflects an expecta0on
that ethical governance and oversight are expected du0es.
9. Why are the expecta2ons of a corpora2on’s stakeholders important to the reputa2on of the corpora2on
and to its profitability?
Stakeholder expecta0ons define what is considered legi0mate and acceptable corporate behavior. Chapter 1
explains that mee0ng expecta0ons related to honesty, reliability, fairness, environmental responsibility, and
responsiveness sustains reputa0on, trust, and ongoing support from customers, employees, investors,
regulators, and communi0es. When expecta0ons are breached, stakeholders can withdraw support, impose
sanc0ons, or mobilize public and poli0cal pressure, directly threatening profitability and long-term viability.
10. How can a corpora2on show respect for its stakeholders?
Respect is demonstrated when the corpora0on recognizes stakeholders’ legi0mate interests and
incorporates them meaningfully into decisions that affect them. Chapter 1 highlights transparent
communica0on, responsiveness to concerns, and efforts to avoid unjustly imposing risks or harms on
vulnerable or voiceless groups as markers that stakeholder interests are treated as real constraints and
considera0ons, not as mere public rela0ons language.
11. How can conflicts between the interests of stakeholders be resolved by a corpora2on’s management?
Chapter 1 recommends addressing stakeholder conflicts through sensi0vity, fairness, and clarity about the
reasoning behind decisions. Management should strive to understand each stakeholder’s perspec0ve,
consider the rela0ve importance and legi0macy of compe0ng claims, seek op0ons that minimize avoidable
© 2027 4
