Question

Tehra Dactyl is an accounting for Skeds, Inc., a footwear and apparel company. The company's revenue and net income have increased by more than 100% over the past three years. During the same period, Tehra and her colleagues in the Accounting department have not received a raise or salary increase. Frustrated by not receiving a raise while the company has thrived, Tehra has begun submitting expense reimbursements for personal purchases. Tehra has a good relationship with her supervisor, and he simply 'signs off' on Tehra's expense reimbursements. Tehra suspects that he knows that she is submitting personal expenses for reimbursement and is 'looking the other way' because Tehra has not received a raise in the last three years.

Are Tehra and her supervisor acting in an ethical manner? Why or why not? Explain.

What controls could the company implement to help deter such actions from happening within their accounting department? Explain beyond a listing of controls.

Remember to use proper grammar and syntax for your answers and to answer in narrative form. Follow proper APA formatting for your answers, including proper citations/references for any sources that may be used.

Answer 1

No, Tehra and her supervisor are not acting in an ethical manner as reimbursement of Tehra’s personal expenses is leading to unnecessary burden on Skeds’ financials. These expenses that are being reimbursed are personal expenses of an employee and are in no way related to the operations and business of Skeds Inc. The action of Tehra and her supervisor is unethical as per the ethical theory of ‘deontology’ and the ‘virtue’ theory. As per the deontology theory Tehra and her supervisor should adhere to their obligations and duties within the organization and as per the virtue theory they should perform their duties as per the morals, values and ethos of the organization as well as their own virtue principles. (Chonko)

To deter such actions from happening within their accounting department the company should focus on bolstering its ‘control environment’. Tehra’s supervisor is regularly approving her expense claims despite the fact that these claims are with regards to personal expenses. To prevent such a situation in future the company should re-inforce its control environment. The control environment refers to the policies and practices as put in place by the top management of a company. Authority and responsibility should be assigned to someone who is above the supervisor level within the organization to periodically review the expense reimbursements. Secondly the expense report submitted by Tehra’s supervisor should be reviewed by other managers. Lastly the company should, on a regular basis, ensure all policies and procedures, including those related to expense and travel reimbursements, are communicated to all employees. Employees should be asked to submit underlying support documents at all times before the claim is approved. (Thomson, 2015)

References:

1. Chonko, L. Ethical theories. Retrieved from http://www.dsef.org/wp-content/uploads/2012/07/EthicalTheories.pdf
2. Thomson, J. (2015). The importance of Internal Controls. Retrieved from https://www.forbes.com/sites/jeffthomson/2015/09/24/the-importance-of-internal-controls/#3dce6a0f3d4a