Summary of the Case
In the case “Rusty and Dusty Slow Movers,” Penny is the first Controller hired at a medium-sized farm machinery company. One of her initial goals as a controller is to determine how accurately the inventory on the books reflects its fair market value. The company acquired and repossessed equipment that is hard to sell, and she noticed that there were many dusty machines when she checked inventory pallets. Ron, the inventory control clerk, informed her that most are either from overruns or the recession. Moreover, when the inventory sells, it is sold at a significant discount. Penny discussed the matter with Art, the Company President. Art told her that he believed that many of these items are sellable given appropriate marketing and the right economic conditions. He does not want to write-down the inventory because he is concerned it will negatively impact the profit. Art has indicated that she should help falsify records if it looks like auditors could discover the slow moving inventory.
Ethical Issues and Primary Stakeholders
The main ethical issues that Penny faces are as follows:
First, Penny believes it would be inappropriate to follow Art’s request to not write-down obsolete and old inventory. Second, she is highly concerned about Art’s second request to falsify records and mislead auditors.
Penny faces these ethical dilemmas and needs to decide what to do next. The primary stakeholders include Penny, Art, Ron, the Sales Manager Rhonda,
In this case, there are several conspirators who is involved in the fraud receiving punishment from either SEC or federal government. Robert Levin, the AMRE executive and major stockholder, and Dennie D.Brown, the company’s chief accounting officer, were subject to the punishment in the form of a huge amount of fine by the SEC and the federal government. This punishment came from reasons. After AMRE going public, the company have the obligation to publish its financial reports but its performance did not meet expectation. The investigation by SEC shows that Robert took the first step of this scam, fearing the sharp drop of AMRE’s stock price because of the poor performance of company. He abetted Brown, to practice three main schemes to present a false appearance of profitable and pleasant financial reports. Firstly, they instructed Walter W.Richardson, the company’s vice president of data processing, to enter fictitious unset leads in the lead bank and they originally deferred the advertising cost mutiplying “cost per lead” and “unset leads” amount, so that they deferred a portion of its advertising costs in an asset account. The capitalizing of advertising expenses allowed them to inflate the net income for the first quarter of fiscal 1988. Secondly, at the end of the third and fourth quarters of fiscal 1988, they added fictitious inventory to AMRE’s ending inventory records, and prepared bogus inventory count sheets for the auditors. Thirdly, they overstated the percentage
Samarin is faced with the ethical dilemma of what to do regarding information in his possession that would allege unethical behavior within the OrangeWerks organization. After an analysis of the case, and evaluation of the identified alternatives, it is recommended that Samarin seek to clarify his concerns and attempt to rectify his ethical reservations regarding the organization. This proactive approach provides him the opportunity to right past wrongs, protect all involved parties and assist to establish a future framework for ethical decision making and communication within the organization.
Mr. Pavlo Zhuk, a young, but already well established, entrepreneur from California, is faced with a difficult ethical business decision concerning
It is the responsibility of each and every Vencill Management Consulting employee to understand and demonstrate integrity in the work that is done every day. How employees work within the ethical framework of various and diverse professional fields is also important. To this end, Vencill Management Consulting has adopted the following professional Code of Conduct and procedures related to interactions with our clients in the non-profit sector. In addition to employees, Vencill Management Consulting’s Code of Conduct extends to its contractors, agents and suppliers.
The Goodner Brothers, Inc. audit case is based off the story of two men who have been friends since their childhood: Woody Robinson and Al Hunt. Now as adults, Mr. Hunt works for an auto supply store while Mr. Robinson works for Goodner Brothers, Inc., a tire wholesaler in Huntington, West Virginia. In the Goodner case, internal auditors were conducting their annual inventory counts of Goodner Brothers, Inc. and determined that their numbers were lower than the book inventory numbers by $143,000. As it would with any company, the misstatement of inventory raised red flags forcing the company to contact their independent audit firm to investigate the inventory shortage. The
Bart J. Van Dissel and Joshua D. Margolis’s Martha McCaskey, is a case study about Martha McCaskey, a young, inexperienced graduate in her first full-time job facing an ethical dilemma. McCaskey has to make decisions between promotion from successfully completing a project but conflicting her ethics and professional integrity and alienation from losing 20% of the division’s total revenue and future businesses due to failure of completing the project. To further analyze the case and derives ideal solution, we should understand that McCaskey is not the only major stakeholders influenced by the event. Other major stakeholders and their problems have to be identified. By understanding goals, concerns a problems of each stakeholder, we could then conduct analyses of alternative solutions in order to derive recommended solutions for McCaskey.
• Business Ethics: We knew this problem since October, but tried to hide it with the hope that it will fade away. We will be scrutinized from an ethical perspective.
In the early 1980 the consumer electronics industry was growing at an explosive pace. Between the 1981 and 1984 the total sales for the industry doubled. To support increasing sales massive amounts of inventory has to be procured, marked up and sold to consumers. Inventory becomes the biggest asset a retailer has. As part of the audit planning processes the inspection of the inventory system and verification of the actual inventory numbers should have been a priority. Crazy Eddie was able to inflate its financial results by fraudulently altering its inventory counts and was able to conceal these activities from the auditors for several years.
The Company was a manufacturer of computer hard disk drives (Financial Executives Research Foundation, 2015) based in Longmont Colorado in 1989. The CEO, CFO and other members of management sought to defraud by managing earnings of the Company with fraudulent inventory, receivables and journal entries. The executives and management created boxes of inventory with bricks and scraps of metal for the auditors
Jones over forecasts his inventory and has a low inventory turnover ratio. This drastically increases his accounts payable, as he isn’t able to pay due to low cash inflow. His account’s payable increased by nearly 9 percent in 2006. Nearly half of his current assets are in inventory. Also Jones isn’t able to take advantage of the cash discounts offered by his suppliers due to his slow cash collection process. In order to perform well, the company must improve its inventory system and its cash collection policies.
Abstract: Martha McCaskey has been consistently outperforming herself maintaining high levels of integrity in each project assignment. Currently, she was the project lead for a critical project entitled ‘Silicon 6’ which apart from having high significance for her personal career also had high significance from her company’s future perspective. The project required Martha to research upon manufacturing technologies and plant setup costs for a computer chip that the client’s competitor was planning to launch soon. Martha has been promised a promotion to group manager and the organization has been offered interest in assigning approximately 10 new projects. The project presents an ethical dilemma in front of Martha wherein she needs access
It is a relevant ethical dilemma because it is a situation in which an ethical decision needs to be made by a businessman (CFO of Gabriel Resources) where viable options to this case are available which will be judged further in this essay by applying ethical theory and concepts.
Let 's consider this scenario, Jill a 45-year-old woman and vice president of sale in a family owned mid-sized candy corporation have an ethical dilemma in regard to recommending Henry, William Potter oldest son to the position of C.E.O.
Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche
Nevertheless, the decisions should not be unethical that the reputation of the corporation is risking (Wheelmen, T. & Hunger, J. (2010)