Ethics in Business and Accounting Principles

Subject: Business Ethics
Pages: 3
Words: 842
Reading time:
3 min
Study level: College

Company ethics is the study of proper business rules and procedures concerning potentially contentious topics such as financial regulation, market manipulation, corruption, prejudice, corporate social performance, and fiduciary obligations. Business ethics is frequently guided by the law, but it may also serve as a fundamental framework that firms might choose to adopt in order to earn public favor (Shaw, 2016). Business ethics ensures that there is a baseline degree of trust among customers and other market actors and enterprises. An investment manager, for instance, must examine the assets of family members and small individual investors. These kinds of measures guarantee that the public is treated fairly. Business ethics emerged in the 1960s as firms became more cognizant of a growing consumer-based culture that expressed worries about the climate, social justice issues, and corporate social responsibility. The growing emphasis on social concerns was a defining feature of the decade.

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Tiffany Lyons has been appointed as the deputy accountant of Key West Stores, a specialized retail firm with nine locations in one metropolitan region. The settlement of all bills is consolidated in one of Tiffany’s departments. Her essential task is to keep the firm’s credit rating good by paying all invoices on time and taking benefit of any cash reductions. Tiffany is being trained in her new responsibilities by Jay Barnes, the former assistant treasurer who was elevated to the treasurer. He directs Tiffany to keep the habit of writing all cheques net of discounts and date them for the last day of the discount period.

Jay goes on to say that they always keep the cheques for at least four days after the discount period before sending them. As a result, they will receive an additional four days of return on their capital. Most creditors require their clients’ revenue and do not protest. Furthermore, they accuse the circulation desk or the post office if they complain about missing the discounted period. The firm has only lost one markdown out of every hundred that way; he believes that everyone does it and encourages Tiffany.

For myself, I emphasized two straight points that are used incorrectly in this case:

  • “Responsibilities principle; In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities” (AICPA, 2014, p. 5).
  • “The public interest principle; Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate a commitment to professionalism” (AICPA, 2014, p. 5).

In my opinion, the situation in which Tiffany found herself is somewhat tricky, as she should listen to a more experienced employee but also not harm the end customers. The interests of defrauding customers are not ethically correct, and Tiffany is faced with a choice of how to proceed. Speaking about the principles that are violated, I can single out the principle of responsibility since by carrying out such manipulations, Tiffany will have to disclaim responsibility and shift it to the post office, but she will be guilty at this moment. As well as the principle of public interest, clients are interested in receiving their services, quality, and the right time, and carrying out such manipulations; there is a risk of losing clients. Although a former employee says a tiny dropout rate, a more inexperienced person like Tiffany can increase this rate, and there will be more rejections.

I believe that here the end client and the postal service are obviously suffering without even realizing it, and the company is extending the term of its services without advertising. As a result, the company profits from additional income from interest, which is, to put it mildly, unethical on the part of the company. Since all the blame goes to the postal service, customers cannot suspect anything. The most losing situation here is mail, which can lose its reputation, good service, and customer base decrease over time.

Tiffany needs to assess the risks and what can happen if a past employee’s scheme fails. She should find out if management knows what is happening and, if so, how they feel about it. Much can depend on their answer. Tiffany definitely has choices that clearly reflect her position. If the management is aware of what is happening and encourages it, then Tiffany should quit so as not to do such things. If management is unaware of this, and the former employee is forcing them to follow the old pattern, she should talk to management and figure out how to solve the problem. There are also two more radical choices: to quit this company immediately after learning about it or to accept the conditions and work as if necessary, even though this violates the norms. I prefer talking to the management anyway; it will help answer all the questions.

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I would consider this plan as the most effective in this situation:

  1. Assessment of risks and what is happening;
  2. Identifying vulnerabilities;
  3. Conversation with management regardless of their position;
  4. Decision making based on personal opinion, code and leadership position;
  5. Making the plan a reality.

References

AICPA. (2014). AICPA code of professional conduct. Web.

Shaw, W. H. (2016). Business ethics: A textbook with cases. Cengage Learning.