Ward is schedule to visit the corporate headquarters of Evans Industries. Ward expects to use the information obtained to complete his research report on Evans stock. Ward learns that Evans plans to pay all of the Ward’s expenses for the trip, including cost of the meals, hotel rooms, and air transportation. Which of the following actions would be the best course for ward to take under code and standards?
1. accept the expenses paid trip and write an objective report
2. pay for all travel expenses, including cost of meals and incidental items
3. accept the expense paid trip but disclose the value of the services accepted in the report
4. write the report without taking the trip
Answer: 2 is correct answer, the best course of action under standard 1 (b)
Answer 1 would not be the best course is incorrect because it would not remove the appearance of the conflict of interest: even though the report would not be affected by reimbursement of expenses, it could appear to be.
Steven Taylor, a mining analyst with Bronson Brokers, is invited by Precision Metals to join a group of his peers in a tour of mining facilities in several western U.S. states. The company arranges for chartered group flights from site to site and for accommodations in Spartan Motels, the only chain with accommodation near the mines, for three nights. Taylor allows precision metals to pick up his tab, as do the other analyst, with one exception – John Adams, an employee of the large trust company who insists on the following his company’s policy and paying for his hotel bills himself.
Comment: the policy of Adam’s Company complies closely with standard 1(B) by avoiding even the appearance of conflict of interest, but Taylor and the other analyst were not necessarily violating standard 1(B). When allowing companies to pay for travel and accommodations under these circumstances, members, and candidates must use their judgment keeping in mind that such arrangements must not impinge on a member’s or candidate’s independence and objectivity. In this example, the trip was strictly for the business and Taylor was not accepting irrelevant or lavish hospitality. These arrangements are not unusual and did not violate the standard 1(B) so long as Taylor’s independence and objectivity were not compromised. In final analysis, members and candidates should consider both whether they can remain objective and whether their interiority might be perceived by their clients to have been compromised.
My questions are:
? After reading the second example does option B appears to be correct answer.
? What should an analyst do in a real life situation i.e. worry about the appearance of the conflict of interest: even though the report would not be affected by reimbursement of expenses, it could appear to be or write an independent and objective report without taking into consideration how it would appear to the clients.作者: mik82 时间: 2013-3-30 20:37
hmm this baffles me as well. I remember the 2nd question…paying for travel and meals is RECOMMENDED not REQUIRED.
For example 1 I thought (3) was the answer??
The question should really state “Which of the following actions would be the best course (BEST RECOMMENDATION) for ward to take under code and standards?
comments and explanations are welcome.作者: Rasec 时间: 2013-3-30 20:37
There are some unique elements to the second example.
It was for a group of analysts, not one.
Doing site visits to mines in multiple remote locations in a short period of time is not the type of thing that could likely be arranged in an efficient and cost effective manner by the analysts individually, and even if it were feasible, it might be less convenient for the company and not the best use of their time/resources. Charter flights/hotels probably allows the company to accomplish in 3 nites what logistically might take much longer otherwise, so it benefits the company as much as the analysts.
This is very different and more unique situation than a routine visit to corporate headquarters作者: YAhmed 时间: 2013-3-30 20:37
spirit Wrote:
——————————————————-
>
> Super I: The point what I was trying to make was
> if the trips (paid by the companies) were taken
> strictly on the business purpose then that won’t
> be considered as violation of ethics and standard.
The thing is I’m not sure if that’s absoluetely true. If the company offered to fly you first class and put you up in a four star hotel on a trip to their home office in a place that’s easily accessable, you have an issue even though its strictly business because of the perception of special treatment and the fact that you can arrange it yourself. In this example it is assumed that planes were chartered to accomplish what couldn’t be done via commercial transportation.作者: anshultongia 时间: 2013-3-30 20:37
i like explanation by Super I. if you have a choice to pay for yourself or let the researched company pay for you, you should always pay for yourself if your independence and objectivity might be questioned. However, if you don’t really have a choice and don’t get special treatment (such as in the example #2), that should be ok.作者: profil 时间: 2013-3-30 20:37
thanks a lot super I and maratikus作者: mar350 时间: 2013-3-30 20:37
point noted!作者: himanshumh 时间: 2013-3-30 20:37
Bump
The point here is that there is no contradiction. The difference between these two answers is best summed up by SuperI:
“Doing site visits to mines in multiple remote locations in a short period of time is not the type of thing that could likely be arranged in an efficient and cost effective manner by the analysts individually, and even if it were feasible, it might be less convenient for the company and not the best use of their time/resources.”
Its the fine line and can definitely trip anyone up.
