Analysis of Ethical Issue Case - Essay Example

Case Study Analysis Introduction Every business encompasses some ethical challenges. In their day to day dealings, employees deal with a range of ethical and moral issues. Some ethical issues are so complicated that employees give up in their attempt to solve them. Ideally, an employee should do his/her best to solve the ethical issue utilizing all the skills and resources at his/her expense. It is easy to turn a blind eye to the ethical challenges, but in order to be dutiful, it is imperative that one realizes and makes an effort to solve such issues in a just way. This is the case study of a lady named Lisa Michaels who is a Certified Public Accountant (CPA) and presently works with Home and Personal Care Products as Finance Manager. She is an experienced and dutiful employee with a very good reputation for honesty and depth of analysis skills. Ethical Issue In this case, Lisa faces the challenge of identifying loopholes in the financial matters between her own company Home and Personal Care Products and a company it acquired named Prestige Fragrance Company. Lisa has concerns over evaluation of the assets of the acquired company and Mr. Anderson, who is also a CPA and Controller of the merger on behalf of Prestige Fragrance Company has not managed to address Lisa’s concerns satisfactorily. Lisa thinks that the costs have been capitalized by Prestige Fragrance Company whereas they should principally be not. The ethical challenge for Lisa is to find answers to her queries without tarnishing the relationship between the parent company and the acquired company. Key Stakeholders Key stakeholders in the case include everybody working in and associated with both companies i.e. Home and Personal Care Products, and Prestige Fragrance Company in general, and the controllers of financial operations of the two companies i.e. Lisa and Mr. Anderson in particular. Lisa might lose her job if her claims are based on weak foundations and if she cannot find proof in support of her accusations that she has not yet openly made. Mr. Anderson, on the other hand, who is also a CPA and is respected a lot by the Board of Directors, risks losing his job as well as image if he is found guilty of capitalization of costs or presentation of liabilities as assets to Home and Personal Care Products. Stakeholders also include the people and companies that have purchased shares of the two companies because any profit or loss made by any of the two companies has a direct impact on the value of their shares. In order to maximize the likelihood of a successful merger, it is imperative that both companies deal with each other with complete sincerity and honesty and that all financial matters between the parent company and the acquired company are transparent. Alternative Courses of Action One way for Lisa is to try to learn more about the other accrued liabilities on her own by conducting research. She should try to verify whether the journal entries are really standard practices in a fragrance business and if the fragrance business is really as uncertain as Mr. Anderson is trying to project. One possibility is that as a result of her research, she would be convinced by Mr. Anderson’s response in which case, she should let go of them. The other possibility is that her suspicion would be increased in which case she would need to take some objective measures to get a detailed understanding of the accrued liabilities. However, this process might be very time-consuming. Another way for Lisa to solve the ethical issue is by trying to get a second opinion about the accrued liabilities as well as about all her concerns over the capitalization of costs from another representative of Prestige Fragrance Company. However, she is not fully equipped to make it happen. Best Course of Action It was very responsible and wise of Lisa to carry out an investigation on her own by meeting with Mr. Anderson. However, it so seems that Mr. Anderson is underestimating the position and power of Lisa. One reason why this might be happening is that every time Lisa meets Mr. Anderson, it is a meeting between just the two of them. This time, Lisa needs to share her insights and details along with the paper documentation with her manager, and organize a meeting between the Mr. Anderson, herself, and her manager. Not only would the presence of more than one representative of Home and Personal Care Products exert more peer pressure on Mr. Anderson, but he would also realize the power of Lisa. It is very important that all people playing major roles in the operations of the joint venture fully understand each other’s responsibilities, roles, and power. Lisa should set the context by presenting her doubts with respect to the finance documents in a presentation and seek responses of Mr. Anderson in the presence of the manager. This will most probably be a productive meeting resulting either into further strengthening of the relations between the parent company and the acquired company or possibly a breakup between the two. Either way, any damage at this stage would be far less colossal than later. Conclusion This was a very informative case study that provided a detailed insight into the kind of ethical challenges people may face at work. The job of Controller of Financial Operations (CFO) or Finance officer is very critical because any slackness on the part of the employee plays a decisive role in the failure of business. In the case study under consideration, Lisa has done a lot in her capacity to ensure that the merger is not happening with any hidden frauds, but so far, Mr. Anderson has not cooperated with her. It is time for Lisa to take additional measures to find answers to her queries and do justice to her job. For this, she may need to consult more sources to be equipped and knowledgeable to understand the details of assets mentioned by Prestige Fragrance Company. Read More