Ethic Case

Ethic Case

The Riverside Bottling company obtained a large loan from the insurance company with a condition of maintaining a balance of $200000 or more in their accounts. However, at 30 June, the account balance settles at $80000. I report this to Gena, the financial vice president who advices me to keep the receipts book open for one more day before issuing a report to the insurance company. Her argument concerning this is that the company will default the loan agreement. She is afraid of losing her job since the insurance company may close the company down. She assures me of a $150000 check from the Oconto Distributors that is due in one day. This check is supposed to solve this situation. Being the company’s assistant controller in charge of the general ledger accounting in the company, I am in a dilemma since I have to follow the ethical codes regarding this situation.

I may suffer from the negative effects that accrue from this situation such as losing my job just as Gena suggests. This may result to the insurance company shutting down the company due to failure of compliance. However, it may also fail to result to this. If I follow Gina’s advice and falsify 30 June cash balance for one day with the hope of receiving the $150000 from Oconto Distributors the next day, I will have failed to practice the work ethics. I will have failed in upholding my integrity. As a good assistant controller, I should practice honesty and integrity in order to gain the company’s trust. In the event of the investigations of the company’s records by the auditor, this occurrence may be identified. This is considered a fraudulent act that may lead to punishment by being charged in court. I will be charged in court for preparing a fraudulent report. In the end, I will lose my job (Ciulla, Clancy, & Robert, 50).

The company will also lose the insurance company’s trust as a lender and creditor since it will have deceived it. A company should always keep correct and accurate records of the financial statements and the balance sheet. Therefore, keeping a cash receipt book open even for a day in order to overstate the cash balance is an unethical action that should not be encouraged by any top or lower employee in a company. This deceiving and unjust action lowers the name of the company. Therefore, the financial vice-president should not encourage such acts in the company. Due to this, I cannot follow the advice of the financial vice-president. I will be misappropriating the balances and causing fraud in the company. Since I am in charge of the general ledger accounting, it is my responsibility to keep correct records. Therefore, when this act is identified in the company’s investigations, I will be more liable as compared to the financial vice-president. I will be accused of this immoral act and not her. Therefore, it is only wise to be ethical (Ferrell, John, & Linda, 99).

However, since Gena is my boss, she might fire me for not obeying her instructions and saving the company from the loan agreement with the insurance company. However, this will only happen if the insurance company fails to compromise with the company despite the company’s attempt to be honest with them. In addition, if this happens, Gena will be portrayed as an unethical leader. If I comply with her instructions things might go wrong. The check might not be received and in turn cause the business to suffer anyway. As a professional accountant, I should not agree to comply with Gena’s instructions since I am not sure if the money will be received the next day. We only have the knowledge of the check still being in transit and therefore, such a risk cannot be encouraged. As an accountant, I will be going against the accounting standards if I chose to record the receipt.

However, if the company suffers due to its inability to satisfy the insurance company’s condition of maintaining a $200000 balance in its accounts, it is evident that the company will have defaulted on the loan agreement. This will cause the insurance company to lose trust and faith in the company and in turn, it will withdraw its efforts from financing the company. Eventually, the business will end and the employees will lose their jobs. Therefore, doing the right thing and being ethical is the correct thing to do. In deceiving the insurance company, the company may succeed today. However, in the event of a similar event in future, they may not succeed in getting away with such an action. Therefore, a bad act always catches up with people. In this case, it is always fair to practice ethics and transparency in the work place.

What I would do in this situation is advice the vice-president against keeping the books open for one day as she instructs me. I would ask her to allow me to prepare an accurate report as required in the accounting standards. The vice president or the president can then solve this situation by arranging a meeting with the insurance company. During this meeting, they will discuss this situation. They can explain the low cash balance to be only temporary and assure them of its correction as soon as possible. They can also discuss the issue by requesting the insurance company to avail them with more time to correct the situation. If the company feels that the conditions of maintaining a balance of $200000 is too high, they can negotiate with the insurance company to reduce the amount to favor the company. Practicing ethics in the work place is always the best option (Ciulla, Clancy, & Robert, 55).

Works cited

Ciulla, Joanne B, Clancy W. Martin, and Robert C. Solomon. Honest Work: A Business Ethics Reader. New York: Oxford University Press, 2007. Print.

Ferrell, O C, John Fraedrich, and Linda Ferrell. Business Ethics: Ethical Decision Making and Cases. Boston: Houghton Mifflin Co, 2008. Print.