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For four years, Valerie Thorpe was Director of Accounting for Taurus Construction. She was fired by the company's owner, Vic Bullard, when she refused to falsify accounting entries. Bullard's directive would have lowered profits, thereby deceiving his business partner and committing tax evasion. Until her firing late in the spring of 2011, Valerie had a few concerns about Bullard's lack of ethics in his business dealings. However, she has not questioned him previously because of her own emotional condition after the unexpected death of her husband. During the spring 2011 semester in graduate school, Valerie was inspired when her classmates recounted their own experiences of resigning from jobs because of unethical managers and owners. Valerie had thought of resigning from Taurus; but, Bullard fired her first. Six months after her firing, Valerie is seriously contemplating whether she should report Bullard's tax evasion to the Internal Revenue Service.

Field Based Research. Interviews with the case protagonist.

The case is suitable for graduate and undergraduate courses in business ethics, accounting ethics, entrepreneurship, income tax accounting and an undergraduate auditing class.

This is a real-life case applying ethical frameworks coverage of which can be challenging as students perceive those theories and frameworks as “dry.”

This case was developed from both primary and secondary sources. Primary sources were interviews. The secondary sources include legal opinions and journal articles.

In 2012, Scot and his co-owner, both experienced groomers, planned to open their own grooming business. Scott talked with his accountant about the best legal entity for their situation, and the accountant advised Scott that a limited liability company (LLC) would be the best choice. The accountant steered Scott to Legal Zoom, an online legal resource that helps people form business entities, including LLCs. A few years after starting their business, Scott and his co-owner reached an impasse: Scott wanted to expand the business; his co-owner did not. Scott talked with an attorney and learned that the standard form LLC operating agreement from Legal Zoom did not cover this kind of situation. How is an LLC formed? What are the consequences of a flawed LLC formation? What kinds of duties do accountants owe business owners?

This case was written for use in an undergraduate introductory business law course, an introductory accounting course or an accounting ethics course. The focus of the case supports classroom discussion for online and face-to-face instruction regarding business entity formation and fiduciary duties. Educators who use critical thinking in lessons to apply information about the roles of accountants and attorneys working with business owners can use this case to explore and discuss the impact ethical decisions can have on business owner clients.

Through evaluating and examining this case, students will be able to:

• understand what an LLC is and explain how one is formed;

• recognize the consequences of flawed LLC business entity formation; and

• articulate the roles of accountants in the formation of an LLC.

Students apply the new Institute of Management Accounting (IMA) ethics standard to “contribute to a positive ethical culture” and advice to “actively seek to resolve an ethical issue.” By learning and practicing how to voice concerns students gain confidence in this approach to resolve ethical issues. In addition, most students are inspired by the moral courage of the chief financial officer (CFO) and report an increased resolve to have moral courage.

The case was based on the CFO’s published account of his experience and supplemented with an interview. It has been gradually refined in an ethics course for accounting students over several years and evaluated from a sample of students who completed the course.

The CFO of a mining company was pressured to pledge collateral that was already pledged on another loan. The CFO courageously refused his supervisor’s request and resigned his position immediately (flight). In its ethics guidelines, the IMA requires its members to actively seek to resolve ethical issues internally before disassociating from the organization (fight). In addition, ethics writers Gentile (2010) and Badaracco (2001) suggest ways to communicate ethical concerns. In this case, accounting students learn how to resolve ethical issues using the ethics guidelines and suggestions by analyzing and writing about the experience of the CFO.

The case is used in a graduate ethics course. It may also be used in undergraduate accounting courses.

The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the “new economy” boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.

Students will: Identify the teachable moment in a crisis that leaders can leverage as an opportunity to improve a firm's reputation or core identity, to reinforce values, and to drive change, Understand the impact on crisis management of the media landscape and regulatory decision-making, Realize the fragility of corporate cultures and the need to actively maintain them, especially during difficult times,

The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the “new economy” boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.

Students will: Identify the teachable moment in a crisis that leaders can leverage as an opportunity to improve a firm's reputation or core identity, to reinforce values, and to drive change, Understand the impact on crisis management of the media landscape and regulatory decision-making, Realize the fragility of corporate cultures and the need to actively maintain them, especially during difficult times,

The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the “new economy” boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.

Students will: Identify the teachable moment in a crisis that leaders can leverage as an opportunity to improve a firm's reputation or core identity, to reinforce values, and to drive change, Understand the impact on crisis management of the media landscape and regulatory decision-making, Realize the fragility of corporate cultures and the need to actively maintain them, especially during difficult times,