Ethical Situation Case Outline


EthicalSituation Case Outline



Asa recently well-qualified accountant working with an establishedfamily business as a financial controller, I experienced an ethicalsituation. The company supplies photographers with equipment via mailorder or shop outlets. The customer’s modes of payment have areflection to their diversity. The transactions range from creditcard transfers and 30-day credit accounts. Amazingly, a large portionof customers pays in cash as they collect goods from the companywarehouse. The cash payments reflect the customers’ nature of ownreceipts.

Duringthe first week at the firm, the director of sales who happens to bethe son of the principal shareholder brought to me a settlement ofone of the major customers. It was a cheque, which appeared toexplain the due amount. The amount in the customer in the salesrecord and the amount in the cheque differed. It was an overpaymentas sales ledger balance was before bulk discount was allowed. Thedirector of sales revealed him calculations and the board`sauthorized agreement.

Thedirector of sales says that the managing director of the customercame to pick the discount inform of cash. He argues that it is notunusual happening for the main customers of the company. He says thatit helps to foster a good customer relations leading to unwaveringpurchasing loyalty. He also states that such an arrangement gives himopportunities to interact with the client’s senior staff directly.It also cuts down on bank charges for money management.

Ibecome suspicious and question the motive behind the cash refund. Whyshould the customer not pay the net required amount for the accountsettlement instead of asking for a cash refund? He dismisses me byclaiming that it is none of my business to question the motives.

Thereason I chose to explore this situation, because the integrity andobjectivity of the motive are questionable from a financialcontroller perspective. Being a family business: the directors may goagainst economic ethics in their undertakings. As an accountant, itis my obligation to ensure compliance with set rules, and I shouldnot watch and fail to caution those who act illegally as well asunethically. The actions can discredit my profession as an accountant(Richardson, 2013).


Richardson,J. E. (2013). BusinessEthics 12/13, Twenty-Fourth Edition.New York: McGraw-Hill.