2nd Annual CFMA Southwest Regional Conference | San Diego, CA

September 25-27, 2016

ETHICAL DILEMMAS IN CONSTRUCTION – A

BLUEPRINT FOR WHAT IS ACCEPTIBLE AND
WHAT IS NOT!
Tony Hakes & Tony Stagliano
National Directors of Construction
Industry Services
CBIZ MHM, LLC
Biography of Presenter
Anthony M. Hakes, CPA, CCIFP, is a Shareholder of Mayer Hoffman McCann
P.C. (MHM), an independent CPA firm. He is also a Lead Managing Director
for CBIZ MHM, LLC (CBIZ). Tony is the National Managing Director of
construction Industry Services for both organizations.

Tony has over Twenty years of experience serving construction industry

clients including general contractors, heavy/civil contractors, specialty
contractors and real estate developers. He has provided consultation to
clients on various accounting and reporting issues including revenue
recognition, joint ventures, leases, variable interest entities and evaluation
of change orders and claims.

Tony is also a designated Certified Construction Industry Professional

(CCIFP).

Title of Presentation 2
Anthony Hakes, CPA, CCIFP
National Managing Director of Construction
Industry Services
CBIZ MHM, LLC
3101 North Central Ave, Suite 300
Phoenix, AZ 85012
(602) 264-6835 – Direct
(480) 390-4959 – Cell
thakes@cbiz.com – E-mail
www.mhm-pc.com & www.cbiz.com – web sites

Title of Presentation 3
Biography of Presenter
Tony Stagliano, CPA, CCIFP is nationally recognized as a leading authority and
expert in construction accounting and taxation. Licensed to practice as a CPA
in Pennsylvania, he is a National Director in CBIZ MHM, LLC where he serves
as a National Director of Construction Industry Services. He is based in their
Philadelphia, PA office.
A graduate of Villanova University Tony is a frequent presenter at the AICPA,
CFMA , AGC/CFMA and CICPAC Annual Construction Conferences. He also
writes articles for CFMA Building Profits publication. Tony is a founding
member of CFMA’s Philadelphia Chapter and the Construction Industry CPA
Consultants Association (CICPAC).
Tony has chaired CFMA’s Education and Accounting and Reporting
Committees. He is past CFMA national Secretary and Executive Committee
member. Tony is a recipient of CFMA’s national; Debra Hahn Memorial Award ,
Danny B. Parrish Outstanding Leadership Award and the Joe Quigley Award.
Tony has co-chairs the CCIFP Examination Development Committee for several
years and he co-authored the all day CCIFP Overview course.

ETHICAL DELEMMAS IN CONSTRUCTION 4

Anthony R. Stagliano, CPA, CCIFP
National Director of Construction Industry Services
CBIZ MHM, LLC
401 Plymouth Road, Suite 200
Plymouth Meeting, PA 19462
(610) 862-2420 – Direct
(610) 862-2500 – Fax
(215) 813-8324 – Cell
tstagliano@cbiz.com – E-mail
www.mhm-pc.com & www.cbiz.com – web sites

ETHICAL DELEMMAS IN CONSTRUCTION 5

Session Description
• Contractors face ethical challenges every day.
• In this session we will explore several everyday situations
contractors have to deal with and you will have the opportunity
to express your opinion anonymously as to what you think.
• An interactive session will tackle ethical concepts and apply
them to real life construction situations.
• Responses will be made by text, so bring your cell phone, to
answer whether a particular situation or action is; ethical,
unethical, illegal or unethical and illegal?
• Then see the graphic result of what you and your peers think
and how your opinion measures up.
• You may be surprised by some of your peer’s responses and
subsequent reasoning.

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Session Learning Objectives
• How to incorporate business ethics in the workplace
• A discussion of moral issues facing corporate America
• Defining ethics in the construction industry - an
interactive, audience discussion of how to define ethical
dilemmas within the construction industry.
• How decisions we make have an impact on our reputation
and that of our companies.
• Learn to develop a culture of ethical behavior and strong
reputation.
• Respond to ethical situations and have the opportunity to
re-evaluate your initial decision.

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Human Weakness & The Need for Ethics
Who are we when no one is looking?
Politics Business Sports

8
Impacts of Leaders Behaving Unethically
• Disengaged and disillusioned employees (can’t trust the
leader with their pay, their careers, etc. - best employees
start job hunting)
• Blackmail (people use knowledge to destroy productivity
and make life miserable)
• Loss of clients (news of unethical behavior can send
clients/customers running for the doors!)
• Broken relationships (friends and spouses may decide they
need to stop hanging around)

LEADERS DO NOT HAVE THE RIGHT TO MAKE POOR

ETHICAL JUDGMENTS. TOO MANY PEOPLE ARE
COUNTING ON THEM!
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10
 Moral Reasoning
Ethical
Behavior
Character

(The Motivation)
Courage, Integrity,
Justice. Wisdom,
Benevolence, Righteous,
Anger, Honesty, etc. 11
“Ethics” Defined
“Conforming to accepted professional standards of conduct.”
• Webster’s Dictionary
“A system of moral principles governing the appropriate
conduct for an individual or group.”
• Encarta’s Encyclopedia
“The Golden Rule” –
Do to others what you want them to do to you.
Treat others the way you'd like others to treat you.

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Central concerns of ethics
What are the central concerns of ethics?

• Identifying right actions—distinguishing right from wrong

• Aligning one’s behavior with one’s stated principles (e.g.

integrity)

• Taking full and appropriate responsibility for one’s actions

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Absolutism
• There is only one correct answer to any ethical question.
• Context (time, place, culture) is completely irrelevant.
• The correct answer is absolute and unchangeable.

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Relativism
• There are many answers to ethical questions.
• Context is everything—what makes something right is
simply that a society says it is right.
• All answers to ethical questions are equally valid.

ETHICAL DELEMMAS IN CONSTRUCTION 15

The Cultural Diversity Argument
• Different countries & cultures have different beliefs about
what is morally right.
• Appropriate behavior in one circumstance may be an insult
in another.
• Right and wrong vary from culture to culture and,
sometimes, from context to context.
• Therefore, there are no universal moral rules; what is right
is relative to culture—what makes something right is what
society says it is.

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Tolerance is not acceptance
• We can defend someone’s right to believe the Moon
landings were faked while we still recognize that person’s
views are false.
• However, it’s not clear that all views deserve toleration, if
only because they may manifest themselves in action.
• ….Suppose that Adam believes everyone who disagrees
with him, or all blue-eyed or left-handed people should be
shot….

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Truisms
• Ethics Has No Shelf Life
• It Never goes out of style
• It’s Not Subjective

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Finding Solutions for Construction Industry
• Stiffer penalties for those caught in unethical or illegal
acts
• An industry-wide code of ethics
• More emphasis placed on social responsibly in awarding
criteria
• More training

ETHICAL DELEMMAS IN CONSTRUCTION 19

The Cost of Unethical Behavior
• In 2002, President Bush signed into law the Sarbanes-
Oxley Act for public companies.
• Since then we have had a plethora of Principles-based
accounting pronouncements.
• Increases the cost of getting projects built.
• The big question - Can you legislate ethics/morality
through the creation of laws, regulations and financial
statement disclosures?

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Code of Ethical Conduct
I. Statement of Policy
II. Definitions
III. Standards of Conduct
A. Equal Employment and Non-Discrimination
B. Environmental Compliance
C. Safety & Health
D. Drugs & Alcohol
E. Conflicts of Interest
1. Outside Environment
2. Personal Financial Interests

ETHICAL DELEMMAS IN CONSTRUCTION 21

Code of Ethical Conduct
Standards of Conduct (cont.)
F. Gifts & Entertainment
1. Bribery & Kickbacks
2. Governmental Personnel
3. Non-Governmental Personnel
G. Communication & Records
H. Antitrust Policy
1. Price Fixing
2. Bid Rigging
3. Market Division

ETHICAL DELEMMAS IN CONSTRUCTION 22

Code of Ethical Conduct
Standards of Conduct (cont.)
I. Claims
J. Statements & Certifications
K. Commitment to Disadvantaged Business Enterprises
IV. Obligation to Report Violations & Cooperation
V. Consequences for Violations
VI. Acknowledgement

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7 Tips on Ethical Practices
1. Know your Company’s values and let them dictate each
and every business decision you make!
2. Know the law (local, state, federal and international)
3. Remember that you are not the only one going through
tough financial times right now!
4. Pay attention to your thinking and, in particular, to your
rationalizations.
5. Pay attention to your gut.
6. Not sure whether or not something is legal or not?
7. Everyone is in this together, and the reputation of the
construction industry depends on every member of the
industry.

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In the Eyes of the Beholder
• Owner
• Construction Manager
• General Contractor
• Subcontractor
• Supplier
• Employee

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Polling Questions
A. Legal & Ethical
B. Unethical
C. Illegal
D. Unethical & Illegal

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Poll Everywhere
1. Take out your cell phone
2. Create a text to 22333 (First time only)
3. Put in the message TSTAG (First time only)
4. Then your letter answer (A, B, C, or D)
5. After that only enter your letter answer

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