Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICS(b)(c)The Doctrine of innate PurityThe word ‘Innate’ indicates that it is natural, inherent or inborn. The doctrine of innatepurity holds that children are naturally good. Their problem, however, is that they aresocially inflicted with corruption and the vices of human interactions. On the other sideare adults who ‘push their ways through,’ rather than allow the pace of moral developmentto take charge.(5 Marks)Moral DilemmasA dilemma has been defined by the Chambers Dictionary as “a position where each of twoalternatives or courses of actions is eminently undesirable. It is a predicament.” For example,what should an individual do when his son who is the manager and administratively incharge, steals a valuable item from the stock of goods being sold? Should he, the fatherask his son to pay for the stolen goods or report him to the police? Lawrence Kohlberg, arenowned psychologist, developed a theory of moral development applicable in dilemmasituations. He fervently held that moral development covers the entire life of a humanbeing. One of the moral challenges which the psychologist came up with is called “theHeinz Dilemma.” The dilemma situation in this example is that a woman was dying fromcancer. Her husband could not afford the price of the drug which he believed was curativeand would liberate her. The man could not afford the drug’s price. He became desperateand broke into the doctor’s store to steal the ‘wonder medicine’. Was he right or wrong inhis act?(5 Marks)Total (15 Marks)QUESTION 3(a)(b)(c)What is a corporation? (5 Marks)Briefly distinguish between ‘corporation sole’ and ‘corporate aggregate’ with two examplesof each. (7 Marks)What moral responsibilities do corporations owe their employees? (3 Marks)Total (15 Marks)SUGGESTED SOLUTION TO QUESTION 3(a)(b)(c)A corporation or company is an association of individual natural person who associatetogether, in pursuit of a social, economic or moral objective. The corporate body so registeredunder the Corporate Affairs Commission, becomes an artificial legal person, which can sueand be sued, distinct from the natural human persons who form its membership. Acorporation has no soul, unlike the various individuals who set it up. Consequently, it cannot die. In view of the fact that a company has perpetual succession, it may exist forever,thereby outliving its owners.(5 Marks)A corporation sole is one which has only a member at any point in time. The corporationpasses from one hand to another in what is called, ‘succession.’ Examples of corporationsoles are bishopric and kingship.(3 Marks)A corporation aggregate, on the other hand, is an association of two or more humanbeings who come together in pursuit of economic gain through legitimate business. In theeye of the law, the various persons who form the company become one person, representedby it. The corporation aggregate sues and is sued on their behalf. Examples of corporationaggregate are the Institute of Chartered Accountants of Nigeria and Oando Plc. (4 Marks)Moral responsibilities of corporations to employees. These include the following:(i) Companies should accord concern and respect due to human beings to theiremployees.270