Week 2 Homework Questions Organisational Planning and Control PDF

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WEEK 3 Homework Questions Topic: Ethics in Management Decision Making Question 1

The unethical use of accounting information

ABC Learning was Australia’s – and one of the world’s largest – providers of early childhood education services until it collapsed spectacularly in the late 2000s., when it came to light that its reported financial success was built on a number of questionable accounting practices. Required: 1. Search the internet for information about the ABC Learning corporate collapse and summarise the unethical accounting practices utilised by ABC Learning’s accountants. a. Account manipulation and lack of transparency: Significant discrepancy in revenues, profits and figures stated in company books, Current Liabilities reclassified to non-current liabilities b. Incorrect valuation of tangible assets e.g. Child care licenses c. Accountants did not inform ABC Learning of the dangers that they were in when there were a lot of signed indicating danger for the company. 2. Which of the principles set out in the Accounting Professional and Ethical Standards Board (APESB)’s Code of Ethics for Professional Accountants did these actions contravene? a. Integrity - The accountants did not disclose potentially harmful information to the board of directors. b. Objectivity - Due to conflict of interest ABC learning financial, cash flow and related statements reported false information. c. Professional Behavior - The accountants did not behave in the manner set by the CEPA.

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Question 2

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Whistle-blowing

If Ben decides to raise concerns about the product quality of the Benfield Voyagers, he will become a whistle-blower. Explain the term whistle-blower, and distinguish between internal and external whistle-blowing. Which approach should Ben follow if he does decide to raise his concerns? Whistle-blower: employee who discovers corporate misconduct and choose to bring it to the attention of others. The difference between internal and external whistle-blowing is which party is informed about the misconduct, in the case of internal, the one's supervisor / higher position is informed, in the case of external law enforcement agencies and/or media are involved. Ben should let his supervisor be aware of the quality difference of the proposed pushed tire solution for the company as his supervisor may not be aware.

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If Ben decides to be a whistle-blower, discuss the five conditions that must exist for his action to be ethical. a. When the company, through a product or decision, will cause considerable harm to the public or break existing laws b. When the employee identifies a serious threat of harm Ben has identified a possible harm to their customers from the use of low quality tires being pushed as quality tires that can have the potential to have injuries and fatalities c. When the employee's immediate supervisor does not act, the employee should exhaust the internal procedures and chain of command to the board of directors. Ben should let his immediate supervisor know or follow internal procedures in an attempt to amend the situation. d. Employee must have documented evidence If not Ben should document what he has done, get a valid evaluation of the tires performance and the risks involved with using the tire. e. Employee must have valid reasons to believe that revealing the wrongdoing to the public will result in the changes necessary to remedy the situation Finally if all else fails, external whistle-blowing might be an option for Ben since customer may steer clear of the company if informed that they sell low quality tires.

Question 3

Ethical decision making model

HighLight is an online company that sells lighting products to both the building industry and individual consumers. As a result of its very competitive price schemes, HighLight has developed an extensive customer base, which is reflected in its burgeoning database of customer details, purchasing history and Web usage data. Recognising that this data is potentially valuable to third parties, HighLight’s directors discuss the prospect of selling its customer database to a large insurance company, thus allowing the insurance company to target advertising and mailouts about home and contents insurance packages to home owners. The directors are split on the issue — some view this as an exciting way to add value to their customers, through customised product offerings, while others see it as a gross misuse of information that is not in keeping with the original purpose for which the data were gathered. You have been engaged by HighLight as an ethics consultant and asked to advise the organisation on the possibilities that exist to resolve the boardroom debate. Required Work through the 5 steps of the ethical decision-making model presented in the lecture to evaluate what course of action HighLight should take. 1. Outline the facts of the dilemma and define the ethical issues it raises Highlight's directors discuss the prospect of selling customer data to a large insurance company, this allowing the insurance company to target advertising and mail-outs about home and contents insurance packages to owners. Dilema: Maintaining customer privacy vs. Self interest of the company. Stakeholders: Highlight, Insurance company, customers 2. Identify principles or theoretical frameworks to address the dilemma a. Teological b. Deontological 3. Identify alternative courses of action and the effect on stakeholders a. Share information with insurance company b. Don't share information with insurance company 4. Match the alternatives to the principles/frameworks a. Share information with insurance company Teological: May gain short term profit, but may lose customer loyalty if customer found out but company or insurance company may face legal action -> Unethical Deontological: Dishonesty and data not held confidentiality-> Unethical b. Don't share information with insurance company Teological: may not achieve profit, however loyalty to customers maintained -> Ethical Deontological: Duty of honesty upheld-> Ethical 5. Determine which course of action to take a. Don't share information with insurance company - most ethical course of action based on above anlysis.

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