Accounting Ethics

Read Major Case Study 3: MicroStrategy, Inc. on page 556 of your text.

In six to eight pages, supported by evidence from your text and from other research (at least two resources are required), answer the following questions:

Evaluate the accounting decisions made by MicroStrategy from an earnings management perspective. What was the company trying to accomplish through the use of these accounting techniques? How did its decisions lead the company down the proverbial “ethical slippery slope?”
What motivated MicroStrategy and its management to engage in this fraud? Use the pressure and incentive side of the fraud triangle to help in answering the question. How would you characterize the company’s actions in this regard with respect to ethical behavior, including a consideration of Kohlberg’s stages of moral development?
Why is independence considered to be the bedrock of auditor responsibilities? Do you believe PwC and its professionals violated independence requirements in the AICPA Code of Professional Conduct? Why or why not? Include in your discussion any threats to independence that existed.

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Question 1
In all cases, a system is required to exhibit an exact, sensible, and real financial position of the firm as at some subjective period. Regardless, a pair of managing director partakes in the conniving ascendance of the remuneration by failing to divulge when a wage period is wrapping up. These open-completed flows enable the firm to record wage at the mindfulness of the boss to meet their own special solicitations and the conditions. Such activities are against earnings affirmation under the attractive account statement models.

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