Ethics reflection - Term Paper Example

Ethics Reflection Paper My My My Number and My Teacher’s 2 October Ethics Reflection Paper I. Introduction My ethics reflection paper pertains to my experience while working from June 2006 to May 2008 in the accounting department of an automotive company in Saudi Arabia. I will not mention my firm because I believe it is inappropriate if not unethical to do so. My work in the firm involves using the Delphi and Oracle programs in managing the receivables and payable of our company. In my work I issued checks to suppliers and audited credit payables and receivables. I also assisted in preparing year-end financial statements as well as audited the inventory of spare parts for each year. As part of my duties, I composed and restructured accounts in moving the company from the Delphi System to Oracle. In my life and in my work, the teachings of the Holy Qur’an guide me. The words of Allah in the Holy Qur’an instruct me to uphold the truth and to be truthful to my fellowmen who are my brothers and sisters in Allah. The Holy Qur’an teaches me to be compassionate, to be merciful, and to uphold what is right in the eyes of Allah. The Holy Qur’an also teaches me to be considerate to others and to think of those which can advance the welfare of my fellowmen. On the other hand, I am an accounting professional and I am bound by a code of ethics of the accounting professional. The latest code of ethics handbook immediately available to me is the 2010 handbook of the International Federation of Accountants. Of course, the events happened more than three years ago and the code of ethics at that time may have been different. Nevertheless, the prevailing international code of ethics for accountant then was probably not much different from the code of ethics today. Thus, I will be quoting the international code of ethics for accountants based on the 2010 handbook even if the events that I would be narrating pertains to events before 2010. Section 100.1 of the international code of ethics for accountant pointed out, “the distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest” (International Federation of Accountants, 2010, p. 9). Fundamentally, Section 100.1 is the first paragraph of the code of ethics proper of the accountant’s international code of ethics. Thus, section 100.1 indicates the most important duty of an accountant: an accountant may have been hired by a firm or an employer but the accountant’s first and foremost duty is not really to the firm that hired him or her but the public. Yet, at the same time, fulfilling an accountant’s duty to society is perhaps his or her primary duty to the firm. This is because a good accounting and audit system promotes good corporate governance that ensures the efficient use of resources and company assets. The international code of ethics for accountant says (International Federation of Accountants, 2010, p. 9): “Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest, a professional accountant shall observe and comply with this Code.” The immediately foregoing implies that the specific meaning of upholding the public interest for an accountant does not lie in doing something especially heroic. Circumscribed within his or her role as an accountant, compliance with the international code of ethics is the fundamental meaning of upholding the public interest. Section 100.4 of the code of ethics emphasized that compliance with the code “is required unless an exception is permitted by the code.” Thus, upholding the public interest under the code of ethics of the International Federation of Accountants is very specific: compliance with the code of ethics is the only meaning of upholding the interests of society. Further, exceptions may be followed but ONLY if allowed by the code of ethics. This seems easy enough but in day-to-day situations, there can be competing values. One must make judgments on the question of right and wrong, of what is ethical and unethical. In the day-to-day grind of corporate living, however, putting into life the accountant’s code of ethics can be challenging. Making a decision is not easy because objectives are not always compatible with each other even if they have been supposedly designed to be compatible and consistent. Similarly, right actions or right values involve a hierarchy. Even goals have a hierarchy. Making a decision on what is right versus on what is wrong can be very difficult. II. The Situation In one inventory audit, I discovered that the inventory report for the spare part does not tally with the actual inventory. It is a serious cause for concern, of course, and I am obligated to report the matter. However, the employee concerned with producing the inventory report saw me and requested me not to report the matter to our management. The sum of money involved is not really much but the offense was deemed large enough for the employee concerned to be fired from our company. The employees concerned appealed to my sense of compassion and offered “oversight” as an excuse. He reasoned that he was having problems as a result of a series of difficulties: claiming deaths in the family and difficulties that made him to lose his focus on his job. He claimed that the inventory report document and the actual inventory do not match because of “computation errors” and that, nevertheless, no spare part has been lost from the company. After several cross checks, I figured that indeed nothing was lost from the company and that the employee concerned was probably right, there were computation errors in the report and that, most likely, there was no case of pilferage or theft. Yet, I am still obligated to make a report that can be derogatory to his record of employment. The employee concerned attempted to talk me into not reporting the error. Of course, this is not possible and, besides, what he is asking from me is equivalent to asking me to falsify my report. This is not acceptable and making a decision should be easy. I was wrong in assuming that making a decision to produce a true report was easy. First, his wife is pregnant and they were expecting their baby within a month. Reporting him to my boss can lead to his termination from work. Is this compassionate? Will my action advance what is right? Will I be advancing the interest of society if reporting him to my boss can lead to his termination from work? The man may not be fully competent but it seems evidence was not yet sufficient to establish that he was a theft. Second, his parents have died in quick succession immediately prior to my investigation of the mismatch between the inventory report and the actual inventory. Where is compassion and mercy to my fellowman in this? Shall I make a true report or shall I close my eyes to the facts and assume good faith on the part of the employee? Shall I assume that he was simply saddled with too many problems and was neglectful but not dishonest? What is the correct ethical behavior in this situation? What will advance the cause of the profession? What will advance the interest of society? Is not doing acts of mercy also the interest of society? After all, the employee concerned may not be a thief but only incompetent or troubled at that time. What is ethical or not ethical to do in this case? III. What Eventually Happened In that moment of dilemma I decided just the same to report the man. I said to myself that I cannot really determine whether the mismatch between the inventory report and actual inventory was due to foul play or not. I am unable to fathom whether there was good or bad faith involved. I was not competent to judge whether bad or good faith was involved in the discrepancy between the report and the actual inventory. However, my obligation was to tell the truth and reflect the truth in my report. If indeed there was no foul play involved, the employee can simply be called upon to explain the circumstances involved and make his defense. He was vulnerable to be fired by the company but I reasoned that if there was no really no foul play, the case of whether foul play was really involved or not will be ultimately established. I do what I felt was a right thing: I reported the “anomaly”. An investigation was conducted and management was unable to establish bad faith or bad motive for the employee. However, the employee was demoted. The family of employee concerned has probably experienced some hardships because of my report but they probably eventually survived the situation and the employee concerned continued to work in my former company today. I was informed that today the employee concerned was even promoted two years after his demotion. I was also informed that has acquired a good reputation and had not been involved in any irregularity in our company. Thus, in the first place, did I do the right thing in reporting the apparent irregularity years ago? Was it ethical for me to be a snitch? IV. What I Should Have Done Today I continue to believe I had done the right thing. For good corporate governance to prevail, truth was and has always been necessary. I was right in believing that the more important thing or one of the most important things in my job is to report the truth. Allah requires us to be compassionate but compassion must also be on the side of truth. Corporate governance can never be executed correctly if accountants like us do not make our report as truthfully as possible. In the case of the man involved in what was apparently anomalous, the judgment of whether an accused or suspect in a wrongdoing has acted in good or bad faith does not often depend on the judgment of an accountant but of a committee assigned to assess the accused or the suspect in a wrong doing. In the same way that society will not function well if the attorney, the prosecutor, and the judge are rolled into one personality, corporate governance will crumble if an accountant assumes functions that were not conferred to the accountant. Although there can be exceptions, generally corporations can only be governed well if we do not act beyond the authority conferred to us by the company or by the firm. Wheeler and Hunger (2010, p. 81) pointed out that rule-based governance systems affect ethical behavior. On this we can also say that ethical behavior promotes good corporate governance. V. Applicable Theory As pointed out by Wheelen and Hunger (2010, p. 84), “ethics is defined as the mutually defined standards of behavior.” We need ethics to behave in a manner that would enable our organizations to perform optimally and see to it that resources are used in the best possible manner. Although we may differ on a set of values, a set of ethics would enable to anchor our behavior on a common set of values. Having a code of ethics would enable us to avoid debates on what is right and what is wrong. Instead we anchor the debates on what is resolvable: whether we have followed or not our code of ethics. Periodically, we improve our code of ethics to identify a clearer mode of behavior that may have been unclear or ambivalent in the past. Although some of the materials on ethics identify at least 9 approaches and perspectives on ethics, Wheelen and Hunger (2010, p. 84) identified three approaches: utilitarian, individual rights, and justice approach. I believe that what I have used is the utilitarian approach. I believe in the power of rules to promote ethical behavior and in the power of ethical behavior that is deemed “correct” in promoting good corporate governance and optimal use of resources. Ethics has a utility. That utility may be found in promoting the common good or in promoting corporate governance. My strong adherence to the teachings of the Qur’an enabled me to appreciate better the need for corporate ethics and in the need for a code of ethics among professionals. The teachings of the Qur’an are superior to corporate and professional ethics but the latter sets of code of ethics systematize how man can create a better world and a better corporate world in particular. VI. Summary of Conclusion My conclusion to my ethical reflection is that regardless of one’s core values in life and corporate philosophy, utilitarian ethics are useful because they enable us to anchor our behavior on what will make the corporation survive and remain sustainable in a competitive world. One’s values can be Christian, Muslim, or Judaism but utilitarian ethics provides a way for identifying a set of unities on which corporate and professional behavior may be based. References International Federation of Accountants. (2010). Handbook of the code of ethics for the professional accountants. New York: International Federation of Accountants. Wheelen, T. and Hunger, D. (2010). Strategic management and business policy: Towards sustainability. 13th ed. Pearson Publishing Company. Read More