WEEK 6: A QUESTION OF ETHICS, FRAUD, OR BOTH? A coworker comes to you with the...

WEEK 6: A QUESTION OF ETHICS, FRAUD, OR BOTH?

A coworker comes to you with the following problem.

"I just provided the Chief Financial Officer with our projected sales for next year. I was very aggressive with the projections and know everything must work out perfectly for us to reach these sales projections. The CFO stated I needed to revise them upwards by 25% or I will be fired." We all know he is retiring in six months and I will be left holding the bag on these unobtainable sales projections. What do I do?"

Expert Solution

As far as a business is concerned, the most important responsibility against all the stake holders is to maintain ethical values during the business practices. This ethical value is to be performed by the various levels and areas of the business such as employees, shareholders, promoters, etc.

The company should give employees or members a detailed idea of the types of behavior and decisions to be taken by maintaining the ethical values. There is more importants for the code of conduct to be followed. It is the responsibility of every employee to be maintain ethical values during the course of his duties.

There may be situations where the superiors are forcing the employees to do illegal or unethical things during their employment. But the employee has to manage this situation in a very established manner.

In the given situation the projections prepared by the employee in a very perfect manner. The CFO of the company asked the employee to revise them upwards by 25% or he will get fired from the job. Here the employee is forced to manipulate the financials of the company, which will provide the stake holders a wrong image of the financial forecast. The employee should analyze the outcomes and effects of the manipulation on the company and the stake holders. If the employee believe that the manipulation leads to fraud,unethical or illegal then he should inform the CFO about negative effect on the company and stake holders.

And if the CFO is forcing to do the same even after the same , he may consider to inform the same to the shareholders. He should inform the shareholders the effect of the manipulation also.

There is something called vigil mechanism which will enable the employees or other stake holders to inform about the fraud, illegal, unethical activities taking place inside the company. Under the vigil mechanism the identity of the informer is protected.

Since the manipulation of financial statement will give over expectation or wrong information regarding the performance of the company it is illegal, fraud and against the ethical values. So the employee should not do the same. He may inform the shareholders or use vigil mechanism against the fraud activity.

jeff jeffy answered 1 year ago

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