ETHICAL DECISION MAKING CASE

ETHICALDECISION MAKING CASE

Josephis a well qualified accountant who has been employed in SharksCompany, one of the leading companies in Australia, as a financecontroller after a long period of searching for a job with no avail.The Sharks Company is a family firm which deals with supply ofphotography equipments to photographers via mail orders and shopoutlets. Being the head of finance team, Joseph has an obligation ofensuring that he guides financial decisions by establishing,monitoring, and enforcing policies and procedures, monitoring andconfirming financial condition by conducting audits providinginformation to external auditors and as well that he maximizesreturn, and limits risk, on cash by minimizing bank balances, makinginvestments. In addition he has to provide status of financialcondition by collecting, interpreting, and reporting financial dataand ensure that the outcome of his job complies with federal, state,and local legal requirements by studying existing and newlegislation.

InSharks business, the transactions ranged from credit card transfersand 30-day credit accounts and this was meant to reflect thediversity of the business. Unfortunately, a large portion ofcustomers pays in cash as they collect goods from the company’swarehouse. This is against the rules governing the company. Inaddition, during his first week in the company,the sales director,who happens to be the son of the principal shareholder brought to hima settlement of one of the major customer in form of a cheque. He wasto receive it and make the necessary entries in the books ofaccounts, it was shocking to note that, the figure in the chequediffered from the amount in the customer sales record. The customer’ssales ledger presented an overpayment of$ 1200.

However,the sales director orally presents this information claiming that theamount presented was before discount allowed was deducted, andthecustomer picked the amount on cash through his managingdirectorof which was contrary to accounting standard..When Joseph asked for supporting document, the sales director revealsto him that the board had authorized the agreement and the customerwas given $500 as his discount allowed and the rest of the moneyshared among them. Having board members on this matter, going againstit would mean working against the management thus bringing a conflictof interest. The sales manager went on to threaten Joseph asking himto keep off from the issues that do not concern him as the businesswas a family concern and only the members of the family could solveit.

Bytrying to follow up his accounting competence,Joseph is about to be in commotion with the sales director who saysit’s none of Joseph’s business. This diminishes his independencyin decision making as a financial controller. However, theconcept of Independence is fundamental to compliance with theprinciples of integrity and objectivity and adopts a conceptualframework that requires the identification and evaluation of threatsto Independencesothat any threats created are eliminated or reduced to an AcceptableLevelbythe application of safeguards as stipulated by APESB (153) of whichJoseph cannot even mitigate the risk.

Inrelation to the customer collection of the discount in cash, thesales director arguesthat it is not an unusual happening for the main customers of thecompany but it would helps to foster a good customer relationsleading to unwavering purchasing loyalty. He also states that such anarrangement gives customers opportunities to interact with the seniorstaff directly and cuts down on bank charges for money management andas well fastens the collection of debtors.To Joseph, this is Greed in the business leading to shaving ofethical boundaries and stepping around safeguards in the name ofmaking more money. As a qualified accountant he feels that he can’tlet the desire to earn a better living and acquire more possessionsbut instead should act in a way of ensuring that he follows ethicalguidelines for financial reporting. However, in line with words byLister J it is evident that an accountant who keeps his eyes on hisown bank account more than on his company`s balance sheet becomes aliability to the company and may cause real accounting violations.

Onthe contrary to sales directors argument, Joseph realizes that theday to day activities were affected since they wererunningout of inventory to supply to customers they lost goodwill withsuppliers who have their payments delayed and as well with customersdue to unavailability of stock and/or being chased more aggressivelyfor payments.

Accordingto Duska and others (130) “theaccountingpolicies which help entities to ensure that financial information ishandled in a clear and consistent manner need to be applied to ensurethat company accountants do not incorrectly report financialinformation or cause distortions in the company’s financialstatements.” Any distorted accounting information in shark company,Joseph is held responsible. To add, Sullivan P ,and others (215)suggested that, ethics issues are not exclusive internal but unlikethey should be solved by individual when confronted by externalwithin the acceptable reasoning. In relation to this, Josephhas the duty to confirm the financial condition to auditors whichshould be accompanied by the correct source documents for theinformation whereasbeing a family business the directors who are still the founders ofthe business claims that they might go against the economic ethics intheir undertakings.

Thisintimidates finances ethical control. Bearing in mind that theadjustments that the sales director wants Joseph to make are notsupported by evidences, acceptance to record them might be treated asfraud by external auditors. These jeopardizes Joseph’s job after along time without a one whereas he remains innocent. On other hand ifthe mistakes are not corrected and the records go to auditor’sscrutiny he may end up losing his certificate to practice as anaccountant. It’s too unfortunate that similar related cases werestill evident and are affecting the business negatively in that whennot addressed may lead to a decline in profitability. Joseph feel hehas what it take to correct mess without publicizing, but he lacksomeone to report to us the whole system is polluted.

Inconclusion Ferrell and others note that, ethical decision are part ofeveryday life for those who work in organization. This requiresunderstanding and identifying issues and also the risk involved.As an employee, Joseph is bound to the set rules where thetransactions are ranged from credit card transfers and 30-day creditaccounts. He also knows well that the other who workers in thebusiness are entitled to following this. Considering the consequenceshe may face and as well what the business may encounter, shouldJoseph publicize this information intending to secure his reputationand most likely lose his job which he has struggled to get or adhereto what he’s directed to by the sales director and go against theaccounting code of ethics?

References

AccountingProfessional &amp Ethical Standards Board Limited APESBAPES110 Code of Ethics for Professional Accountants(2010)

DuskaR, Shay B, Ragatz J AccountingEthics.Wiley-Black Well Publisher West Sussex(2011)

FerrellO, Fracdrich J, Ferrell L (2013)Business Ethics Decision Making CasesCangage Publishers Stamford

ListerJ.EthicalIssues Facing The Accounting Profession.Demands Media Publishers. Huston(2014)

O’sullivan,P. Smith M, Esposto M BusinessEthics: A Critical Approach Integrating Ethics Across, the Business.RoutledgePublisher. Oxon(2012)