Question

Case Study
The President of LFC Inc, Jo Rogers, a friend of your family, recently hired you as a trainee executive assistant. Your duties include assisting with strategy, budgeting, and year-end accounts. On 1st Dec 2020 at the end of the financial year, Jo calls by your office. S/he greets you with a warm friendly smile and says s/he is pleased with your work so far and can see how you can play an important part in its future expansion. You are very keen to do this and ask how you can help.
Jo explains that to take advantage of the possibly growing market the firm needs new equipment. This will increase company income and provide security of employment for the firm’s 35 workers. In fact, it may open the possibility of increasing their overtime and hence take-home pay. However, the firm will have to borrow $50,000 dollars and the bank will want to see the firm earning at least 10% on its assets. LFC is currently earning 8%.
Jo knows this and asks you to make a couple of “small year-end adjustments”. The first, is to reduce depreciation expense by increasing the estimated life of the building from 10 to 15 years. The second is to record December’s wage expense on January 4th when the employees are actually paid. Jo concludes, stating with a smile “these adjustments do not involve cash. They are just part of bookkeeping”. “Moreover, with luck we can include you in the executive bonus pool in 2021”. Later you determine that if the President’s instructions are followed LFC will show a return of over 10% on its assets.
Instructions
Using the guidelines provided overleaf identify ethical concerns, analyze the situation, considering all stakeholders, identify dilemmas, and explain what you would do. Will you obey or disobey the President?
Parameters

Answer 1

Answer:- After analyzing the situation, I found it unethical to manipulate the data that will help the firm to borrow $50,000 dollars from the bank as the bank wants to see the firm earning 10%. The company is currently earning 8% so to make it 10% Jo asked me to reduce depreciation expenses, change in employee wages, and improve the profits earning to 10%. This is ethically wrong.

Initially, I will try to make Jo understand the consequences that can take place if a bank is aware that the financial information was misrepresented and how this can negatively impact the company’s reputation. Also not disclosing the right information to stakeholders may lead to a lack of trust and may not invest in the future. I would try to suggest other options where he can get financial support. Still, if he still wants to go with it then, I have to obey him because failing to obey him can affect me both on a personal and professional level. So, if I don't do the task, he may find someone else to do it and could even result in firing me out of the job. Hence. I would have to obey him.

**Hi student, if you have any doubt you can ask me in the comment section. Good luck!