Question

Ethical decision Essay Assignment   

Susan is a CPA and she works for DEKP, a global audit firm. She is a third-year associate on the audit team for Wilks International. Wilks is a U.S. public firm that runs clothing manufacturing facilities in South America and imports and distributes the goods through catalog and retail outlets.

Susan has earned some seniority and she oversees two first-years in testing the trade payables from the South American operations. One of her new direct reports, Edmund, has come across a payable account that doesn't seem right. Instead of specific charges for materials, insurance, or utility payments, this account has a set of recurring payments, every two weeks, and the amount seemed to fluctuate with the local currency rates, which could be quite volatile. Edmund did some quick figuring, and found that the payments were clearly 20,000 units of the local currency, but they were being paid in dollars and the charges ranged from $8,437 to $11,231. These amounts were so small that they were being funded out of a general corporate account, but were recorded as indirect manufacturing expense. Edmund brought this to Susan's attention, said that he suspected that there was the possibility of fraud. Edmund told Susan "at the very least, these foreign currency transactions should be recorded as such, right now these are bypassing the translation procedure". He went on to explain, "furthermore, if they have a vendor they are making regular payments to, even as small as these, they should have a detail account for them".

Susan listens to Edmund and thinks to herself, "Wilks' cost of goods sold is going to be over $20 million, there is no way this is important". She tells Edmund that she will discuss it with Peter, the senior who oversees all of the testing for liabilities. Peter listens to Susan and tells her that she shouldn't worry, he is aware of the account in question, and he has been ever since he found it 5 years ago. Peter lets her know that "I brought this up the chain of command then, and Lucy let me know that the powers that be declare this account to be immaterial, and off limits". Peter continues, "I have heard that the CEO, Trey Wilks, likes to spend a few nights at his beachside bungalow, whenever he comes down for a meeting, I don't know that the account is related to that, but ....".

At the end of the week, Susan will attend a meeting with Lucy, the partner in charge of the whole audit, and Peter as well as other third-years working on the audit. The meeting is a scheduled progress meeting; all topics with respect to the Wilks audit are open for discussion.

Required:

From an ethical perspective, what should Susan consider prior to the meeting? Address the following questions with respect to Susan as she thinks about the upcoming meeting.

1.      Identify the values that you would expect Susan and her firm to have and that would guide their decision. Give brief working definitions of those 3-5 values.

2.      Identify the ethical issues. What makes the issues you identified an ethical issue, instead of a legal or economic one?

3.      Identify and prioritize the most important stakeholders that will be impacted by any decision the firm makes with respect to this particular account.

4.      Briefly describe how Utilitarianism, Deontology or Virtue Ethics might inform Susan’s decision. Which ethical perspective makes the most to you to employ?

5.      Explain how you would come to a decision using the method you selected in part 4. Highlight the important steps that you would take. Make sure you also consider the “personal voice and action” components of the rubric in your writing

Be careful to include all five sections in your response, and be sure to explain your reasoning throughout.

Answer 1

1. VALUES

1.1 Responsibility - It is the responsibility of the senior to adhere and understand to what the junior has come up with and take appropriate actions regarding the same.

1.2 Accountability - The senior should take charge of the the deed done which is not ethical from personalised point of view.

1.3 Adherence to powers - Misuse of power should not be done as in the above case.

2. The issue of having a stay in the bunglow as the cost of company funds was unethical rather being legal or economical one, the chairman was misusing the powers of his designation.

3. Trade Payables would be most affected.