Ethical decision making case study - Research Paper Example

Ethical case study: Suspicion of false accounting Introduction A certified accountant in a commercial organization has a crucial role to perform in creating, encouraging and upholding an ethical ethnicity. A certified accountant in corporate has a duty to promote the legitimate objectives of her or his employing organization. The ethical codes accountancy organizations do not strive to deter a certified accountant within a business from appropriately fulfilling that duty, but address situations in which acquiescence with the essential ethics could be compromised.

Ethical Dilemma As an accountant, one of my roles is to look into financial dealings of the business. In the process, I noticed that the some customers have been overpaying the company and in return, the customers collect the refunds in cash. The dealing is being is being facilitated by the sales director who refuted to shed some light into the activity. My suspicions are about the customers’ motives where they overpay and then collect the money in cash. There is question of integrity. Will I be acting with the integrity if I do not question those motives?

There is also the dilemma of objectivity since I am new to the company; I might face intimidation from directors who are members of the family (King 56). The other ethical dilemma is about confidentiality in terms of whether I should involve and discuss with a third party concerning the company’s practices. There is the issue of the exercising the right professional behavior where one must conform to the relevant regulations and laws, and refute to take part in or aid others in acting unethically or illegally.

Additionally, must be careful with the actions I choose to take as they may or may not discredit my accountancy profession. Facts and researched information As an accountant, I am alert that a number of the business’s clienteles are over disbursing their accounts through the firm and receiving refunds in cash. In case the credit money is dispensed to the clients with respect to the reflective discounts, the customers, who could then play down their returns, could cover up these. Even though there are rather legitimate advantages to the company such as retaining of available customers, the sales director and I have sound reservations that the clients involved are false accounting.

False accounting swindling happens when firm assets are inflated or charges are devalued to render a corporate seem financially sturdier than it actually is (Rayman 56). False accounting swindling encompasses a worker, client or an organization changing, destroying or disfiguring any account; otherwise exhibiting financial records from a person or an organization therefore, they do not mirror their true rate or the fiscal undertakings of that company (Rayman 57). Stakeholders The stakeholders include the accountant, sales director, a number of the company’s clienteles, tax authority as well as, to a slighter extent, other shareholders within the company.

I f the account does not report the case, he or she could discredit his or her accountancy profession. His or her integrity could be questioned. The action is a violation of the accountancy code of ethics. Reporting the case to authority will denote that the accountant is an upright person. The sales director is aiding customers in committing fraud through false accounting. It is evident that he or she has never reported the case, and this means that he or she is deceitful, and is committing crime.

The sales director lacks professionalism. The concerned clients are committing fraud through false accounting. The action is unethical and illegal. Tax authority has role to play of ensuring that individuals do not escape their tax duties. The rest of the stakeholders had an obligation to ensure that appropriate measures had been put in place to detect fraud activities and illegal activities. Now that the case has been brought to light, it would be unethical for directors not to take action against the sales director as well as the clients concerned (Jeffrey 49).

Who must be engaged in the resolution? The persons to be involved in the resolution include the accountant; the sales executive as well as perhaps other panel members ought to be engaged in the consultations. Additionally, the accountant can include other trusted coworkers with whom he or she can discuss the position he or she is in. Possible course of action Since I am currently unaccustomed with the processes of my new company, I must try to ascertain the degree of the matter. This may be achieved by appraising the transactions ledger accounts, which shows credit balances during recent months, which have successively been cleared through cash repayments.

If the knowledge is accurate, the accounts are supposed to recount to a number of the firm’s major clients (King 59). Having ascertained the facts, I should confer the subject with the director of sales and next, if required, with other panel members. In every case, I must arrange for a convention and attempt to recommend a standard solution to overpower any opposition that I may come upon.A professional organization can assist in this. I would advise the executives of the occasion for fraud, which I have detected concerning the cash repayments, besides the business could suffer unpleasant outcomes if it is permitted to continue (Brooks 29).

I could also expound to the executives the ethical canon of my professional organization meaning I cannot just disregard the situation. The other action I can take is resignation to disassociate myself from the unprincipled practices in the company as well as its major patrons. It would be prudent seek legal guidance on occupation as well as whistle blowing responsibilities and rights (dependent to the guidance and rules of one’s professional body) as well as any protection one might pursue from legislation (Alexander 30).

Recommendations Here are some of the recommendations that the company should consider implementing to prevent an occurrence of illegal and unethical activities. Set a whistle /blowing strategy in place. This policy will allow anyone to report cases of fraud without blowing off their cover. Limit and meticulously monitor admittance to sensitive data. By doing this those who wish to commit fraud will be afraid of being caught if they suspect they are being watched. Impose well-defined segregation of responsibilities.

The company needs to segregate duties appropriately, for instance, the sales director should have a sales assistance. Consider job rotation. Job rotation will prevent persons from committing fraud since they will have less time to do so. Additionally they cannot go on with the activity while assigned to another department. In this case, customers will find it problematic to initiate a new individual into their fraudulent activities. Exercise tiered authority as well as signature levels to carry out payments.

By doing this it will be difficult to engage in any unethical and illegal activities. For instance, the sales director alone should not carry out the payments to customers in the company. Reconcile bank accounts as well as other financial statement on an unvarying basis. Reconciling bank statements will enable the company to detect any fraudulent or illegal activities. Audit of procedures and processes in the company; auditing is another method of ensuring that the company is running smoothly.

It keeps the employees in check. Promote an ethnicity of fraud consciousness among personnel. Creating and encouraging fraud awareness keeps the staff informed and can aid in preventing them from engaging in activities that are illegal and unethical. Adopt, and thoroughly implement, a zilch tolerance policy to employee swindle. Have a well-defined response plan primed in case swindle is discovered. Works Cited Alexander, David. Financial Reporting. Cengage Learning EMEA, 2009. Print. Brooks, Leonard J.

Business & Professional Ethics: For Directors, Executives & Accountants. John Wiley & Sons, 2009. Jeffrey, Cynthia.Research on Professional Responsibility and Ethics in Accounting. Preston, 2007. Print. King, Thomas. More Than a Numbers Game: A Brief History of Accounting. John Wiley & Sons, 2011. Rayman, R. A. Accounting Standards: True Or False? Taylor & Francis Group, 2006. Print.