Affect I feel like there are too many rules in society in general. I understand why we have rules. They should be used as a framework for us as we live in society. But, I also feel that we all have a responsibility to use judgment and remember why the rules exist. For example, I got pulled over on the freeway going 8 miles an hour over the speed limit. This was in a remote part of Utah, early in the morning, not another car within sight. Why do we have a speed limit? Probably to keep others safe on the road right. I feel the officer failed in his use of good judgment on that day! I agree with the chapter when the author states that rules "state only necessary, not sufficient conditions." This is most defiantly the case in all aspects of life. Rules cannot possibly account for all cases. Enron in the beginning kept most of the "rules" in a sense. Fastow noted that a independent company needed 3% outside equity, so he enlisted Kopper's partner. This satisfied the "rule," but clearly was not ethical. The author also states that "we must appeal to idealizations in order to interpret rules." Agree with the author full heartedly, although I feel that is sometimes the problem. Not everyone has the same ideals, not even remotely. This is the starting point for good ethics, ones ideals and morals. If a person has good ideals and morals, rules will not apply, that person will use good judgment and do what they feel is right anyway. I feel the author is on target with the section "rules require principles and character." As I've stated before, rules require interpretation on a deeper level. Enron management, in the beginning, followed the letter of the law, not the spirit or purpose of the law.

Behavior What will I do different as I reflect on the rules of the chapter? Rules are given to those who don't have principles. The more rules, the less principles. I come from a family of 14 kids. My parents gave lots of rules to some kids while others had nearly none. The kids with less rules, were the kids that lived by a higher set of principles. They didn't need a curfew of midnight, because the kids knew to call their parents to let them know where they are or whatnot. They did that in order to not lose the trust from the parents. the minute they lose the trust, here come more rules. Principles are what needs to be taught. The author basically stated the same thing, principles trump rules. By teaching and learning principles, this will enable the interpretation of the rules using ones best ideals. A wise man once said "learning correct principles is the only way to change behavior." This is true. This is also the point of this book. We need to learn and teach correct principles in order to practice good ethics. It can be learned. One must have a desire and the motivation to learn correct principles, so as to interpret the rules of accounting.

Cognition I know rules are meant as a guide to follow. One needs to have correct ideals and principles on order for rules to serve their intended purpose. We have read a number of cases where a firm followed most of the rules, but were clearly unethical. Rules are not enough as the author states. It is clear that the accounting profession needs and requires one to be of high ideals and a person of good character. This is a profession that requires the trust of the public as well as those practicing in the private realms of business. I deal with banks and lending institutions a lot in my business. There are a number of institutions that require us to open up our financials to them if we want to do business with them. It would be easy to manipulate the accounting in our favor in a number of areas. But at what cost? We recently employed a CPA firm to do a review of our financial statements. I was surprised at the level of integrity of the lead partner who reviewed our financials. We recognize service contracts based on historical loss ratios (we did). After the firms review, we needed to change the recognition formula, no matter how much we begged and pleaded. It was barley material, but the CPA stuck to his guns. I was impressed.