Roger McDaniels sat in front
ACCT 436 ETHICS CASE STUDY

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1. Identify and briefly discuss the key issue(s) in the case.
The key issues in this case study are two. The first issue is whether Roger’s action of using Cambridge’s confidential information concerning their investment plans in Dugas Incorporation to divert the consequences of selling the supreme ownership and control rights to Cambridge is justifiable. Or, whether this action is possibly to be deemed as insider trading and/or tipping. According to the SEC, insider trading is whereby an employee without being authorized breaches the fiduciary duty and uses confidential information regarding the company’s stock which is not yet publicly declared to trade. Tipping is whereby an insider discloses such information intentionally to third parties, such as family and friend, and provides them with stock information so that they may be the first to benefit most before the stock is publicly declared (which is illegal). This two issues are not there as the secretary was not in any way whatsoever connected to Rogers and had sent those documents by mistake. We also do not find it as tipping and even the stock information concerning the prices is accessed by Rogers online. We can therefore find Roger’s actions under Regulation D qualifying as a sophisticated investor and accredited investor. Private placements under the SEC’s Regulation D aren’t illegal and the SEC maintains that can have obtained the information through such accidental means as Rogers did and the risks involved fall barely on the investor.
The second issue is whether Beth should disclose the matter to the Board of Directors or not, and in that case how would she be found not to act ethically? In order to examine whether she acted ethically or not, it’s important to understand that there’s a protocol that is followed in an office; the chain of command and the chain of power. Can she skip her immediate boss to reach her superior’s boss? That may be a bleach of ethics or it may not be under certain circumstances.
2. What was the ethical dilemma faced by Beth Sullivan?
The ethical dilemma in this case is where Beth put so much weight into the matter and thought of talking it over with her senior-most boss before talking it over with her immediate boss, and whether she should report the matter to the Board of Directors.
3. Do you think Beth acted ethically? Why or why not?
I strongly argue that Beth acted ethically with Rogers. According to the AICPA’s section 2.130.020, if a CPA finds out that there are some threats that are not at an acceptable level, the member is allowed to discuss such findings with their appropriate higher-level superiors within the organization. The auditor isn’t limited to discuss such findings with only her immediate superior but can approach the superior too. Rogers is definitely threatening the independence rule of the auditor as an auditor is just nor an ordinary employee but someone who is also governed by the special code of conduct for the auditors such as AICPA.
4. Are there any other alternative courses of action possible for Beth?
What Beth didn’t follow is that she didn’t report this matter to her immediate boss and could therefore not approve of her actions or actions taken against her. The mentioned code also states that if the member finds out that there was no action taken to resolve his/her concerns, then he or she must take the appropriate safeguards that protect the firm against any further threats to an acceptable level. The issue might have been resolved by other parties before being forwarded to the Board of Directors. The alternatives as the AICPA describes should include that she determines whether the company’s internal procedures and policies are being abused by her, determine whether she is responsible for talking with other third parties such as the company’s external accountant of former auditor, consult with her attorney whether her actions bare any legal concerns, and document her understanding of the code of conduct, facts and other relevant principles that were discussed.

Bibliography
AICPA. (2015) Code of professional conduct. USA: AICPA.

SEC. (2014) Investor bulletin: Private placements under Regulations D: Retrieved from
https://www.sec.gov/oiea/investor-alerts-bulletins/ib_privateplacements.html