Question

Paper I: Letter to the CEO

RE: - Accounting Principles: Why ethics is a fundamental business concept

Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. Because of the confidential nature to which the creating and maintaining of these reports are handled, honesty and integrity are highly regarded traits to the hospitality professional accountant. Professional ethics, or the standards of conduct to which actions are judged to be right or wrong, depends on the honesty of the individuals you deal with as a manager of a business.

For this paper, assume you are the Director of Operations for a hypothetical chain of 24 mid-service roadside motels. The CEO of the chain has sent you a memo stating that he would like to replace the current accounting firm that handles all the operational accounting for the firm. The reason he has decided that their services are no longer needed was not made evident to you in the memo. However, you suspect it may have something to do with the fact that their accounting practices were brought up as “questionable” at last month’s operations meeting, where last cycles income statements were openly discussed and examined by upper management.


The CEO further outlines in his memo that he wishes for you to begin researching new accounting firms. Write a letter addressed to the CEO, Days Inn of America outlining how you propose to value ethical conduct when interviewing prospective companies. In your letter, you should include / address the following areas:

1. Your “personal” philosophy on ethics as a fundamental business concept
2. How you plan on identifying and analyzing the principle elements of business ethics within the prospective accounting firms (be specific)
3. How you plan to ensure the non-ethical conduct of the previous firm will not happen again (internal control measures) specifically under three headings:

a. Cost analysis
b. Analysis of new contracts
c. Participation in efforts to control expenses efficiently
4. An analysis of what challenges you anticipate facing during this project

Answer 1

Answer is as under :

1. Your “personal” philosophy on ethics as a fundamental business concept

Business should be conducted with the principles of Highest standard. In business ethics is very important because the ulimate goal of business is not only profitability but to surive in the long run which is possible only if business is conducted with certain high standard principles and ethics. Principles of highest standard means ethical valued followed by person which is different in a different stiutation. Highest standard should be followed in worst situation also. They are the ethical nature of person only.It means principles, values, code of conduct that are observed from person to person and which governs the fundamental behaviour of human being. It differs from person to person. What is considered as ethical for one person might be unethical for some other person. Ethics in general sense means that how a human being is taught to live his or her life, how they behave with other and what they do when no one is observing them. It tell us that what is good and what is bad, what is right and wrong. Honesty , responsibility , accountability, respect, good communication behaviour reflects some examples of ethical behaviour.

2. How you plan on identifying and analyzing the principle elements of business ethics within the prospective accounting firms (be specific)

In following way, the principle elements of business ethics needs to be identifed within the prospective accoutning firm :

a. Client relation with the accounting firm needs to be checked

b. Number of year experince and history of any unethical alligation or case aganis the accounting firm

c. Expereince and professional behaviours of partner and staffs of accounting firm

d. Audit quality of company is found to be maximum where the size of company is big and different

e. The professional fee charged by the accounting firm should be equivalent to market rates

f. Time duration and work perfection needs to be checked