9-96 Ethical control frameworks In December 2002, Time magazine named Cynthia Cooper, Coleen Rowley, and Sherron Watkins as its Persons of the Year. Cynthia Cooper was vice president of internal audit for WorldCom and informed the firms audit committee that the firm had improperly treated billions of dollars as capital expenditures rather than properly treating them as period expenses. Coleen Rowley was an FBI attorney who wrote a 13-page memo describing deficiencies in the FBI. Sherron Watkins was vice president at Enron and informed chair- man Kenneth Lay of her serious concerns about Enrons financial reporting. Select one of the two accounting-related situations (WorldCom or Enron) to answer the following questions on the basis of the Time magazine Person of the Year articles or other articles.

Required

1. (a) How did Cooper and Watkins become aware of financial reporting problems within their companies?

2. (b) Which of the nine alternatives listed on page 348 (or other variation) did Cooper or Watkins take? How did the public become aware of their concerns?

3. (c) What pressures did Cooper or Watkins face to suspend their ethical judgments or drop their concerns? Who would have benefited if Cooper or Watkins had dropped their concerns?

4. (d) What information is reported in the article about WorldComs or Enrons code of ethics, com- munication of the code, and system of reporting violations of the code?

5. (e) What role did personal norms play in Coopers and Watkinss decisions to report the prob- lems they had discovered?

6. (f) What consequences did Cooper and Watkins face for reporting the problems?

7. (g) If you had been in Watkinss or Coopers place, what would you have done?