JM Custom Wheels, Inc.: Ethics in Loan Collateral Reporting

This case examines ethics issues related to the misrepresentation of facts in loan collateral certifications. These issues are faced by an employee and a minority shareholder, both of whom are certified public accountants (CPAs). The case requires that students recognize an ethical dilemma, evaluate alternative courses of action, and make a decision. The case also requires interpretation of the American Institute of Certified Public Accountants (AICPA) code of conduct and other professional standards. The interpretation of the AICPA code is particularly challenging for students because they have to determine how the code applies to a CPA who is not an employee of the firm and not in public practice. Because the company conducts a portion of its business in the international environment, the case can easily be modified for use in coverage of international ethics standards established by organizations such as the Canadian Institute of Chartered Accountants and the Certified General Accountants Association of Canada. The case is applicable for use in both undergraduate or graduate accounting classes and MBA classes. If the case is used early in the curriculum before students have been exposed to ethical reasoning models, the application of ethical decision models should be omitted from the learning objectives. The case is ideal for use as a course-enabled assessment of student learning objectives. Teaching Notes include critical thinking, ethical reasoning, and written communications assessment rubrics [PUBLICATION ABSTRACT]