Robin, a middle management employee, becomes aware of accounting irregularities

Question

Robin, a middle management employee, becomes aware of accounting irregularities in financial reports submitted by his boss, Brooke, which suggest that Brooke has diverted $10,000.00 to the company's sustainability initiative rather than distributing the funds to the purchasing department budget as intended.  The sustainability initiative has facilitated major improvements in local water quality standards and, as a result, the overall health of the community has markedly increased, at a sizeable savings of medical costs (approximately $50,000.00 in medical savings in the current year alone.)

Refer to Fact Scenario C: Question C1:

What considerations should be most important to Robin's ethical decision-making process?

Only the illegality of the diversion of the money.

The illegaility of the diversion of the money and the fiduciary duty that Brooke owes to the Company.

The negative consequences that Robin might face if he blows the whisle on his boss.

The fact that everyone in the department does it.

1 points   

QUESTION 14

Refer to Fact Scenario C: Question C2

Which decision should Robin make in the above scenario that would best comply with legal and ethical considerations?

Robin should disclose Brooke's diversion of funds to the sustainability initiative, because Brooke's conduct is both potentially illegal and in breach of Brooke's fiduciary duty to the company. However, Robin should detail the many benefits that the sustainability initiative provided for the health of the community and encourage the company to expand that program (as well as publicizing the good that the company has done!)

Robin should not disclose Brooke's diversion of funds to the sustainability initiative, because Robin might get fired and ethics never requires you to act in ways that don't benefit your own interest.

Robin should disclose Brooke's diversion of funds to the sustainability initiative, because Brooke will probably be fired and Robin is in line for Brooke's job.

Robin should not disclose Brooke's diversion of funds to the sustainability initiative, because that initiative has provided significant benefits to the health of the community.

1 points   

QUESTION 15

Refer to Fact Scenario C: Question C3

Assume that the company has been informed of Brooke's diversion of funds and is making a decision about whether or not to fund the company sustainability initiative. Who has an interest in this decision and which stakeholders should the company consider?

The shareholders, only. Since the sustainability initiative will decrease the amount of profits available to the shareholders, then the corporation can never engage in sustainability efforts that benefit the public.

The public health of the community, only. Since the sustainability initiative has been such a success, then the company has an ethical obligation to fund it because benefit to the health of the community is the only consideration that can ethically be considered.

The shareholders and the public health of the community, only.

The shareholders, the public health of the community, the employees (some of whom have worked hard on the sustainability initiative and many of whom are inspired to work for a company with such a clear dedication to the community at large; all of the employees have an incentive to keep their jobs, which might be at risk if the company does not pay adequate attention to profit,) the consumers (whose good will and interest in the company might be enhance by the company's efforts in the community,) as well as suppliers (who might not get paid as much if significant funds are diverted to the sustainability initiative, but who might benefit from the continued health of the company which might be secured because of good will.)

Only the illegality of the diversion of the money.

The illegaility of the diversion of the money and the fiduciary duty that Brooke owes to the Company.

The negative consequences that Robin might face if he blows the whisle on his boss.

The fact that everyone in the department does it.

Explanation / Answer

C1. The illegaility of the diversion of the money and the fiduciary duty that Brooke owes to the Company.

This needs to be considered because the there is no doubt that the action is ethical but illegal to quite an extent and Robin should consider the same as well.

C2. Robin should disclose Brooke's diversion of funds to the sustainability initiative, because Brooke's conduct is both potentially illegal and in breach of Brooke's fiduciary duty to the company. However, Robin should detail the many benefits that the sustainability initiative provided for the health of the community and encourage the company to expand that program (as well as publicizing the good that the company has done!)

robin should be quite clear from his side and should disclose the incident although he should also mention about the advantages and benefits that the organization have encounterd because of the sustainability initiatives.

C3. The shareholders, the public health of the community, the employees (some of whom have worked hard on the sustainability initiative and many of whom are inspired to work for a company with such a clear dedication to the community at large; all of the employees have an incentive to keep their jobs, which might be at risk if the company does not pay adequate attention to profit,) the consumers (whose good will and interest in the company might be enhance by the company's efforts in the community,) as well as suppliers (who might not get paid as much if significant funds are diverted to the sustainability initiative, but who might benefit from the continued health of the company which might be secured because of good will.)

Each and every stakeholder of the organization will be impacted by the decision in order to have a succesful venture as a whole.

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