Question

Troy just returned from a business trip for health-care administrators in Orlando. Kristen, a relatively new employee who reports to him, also attended the conference. They both work for Gateway Hospital, a for-profit hospital in the St. Louis area. The Orlando conference included training in the newest reporting requirements in the health-care industry, networking with other hospital administrators, reports on upcoming legislation in health care, and the current status of regulations related to the Affordable Care Act. The conference was in late March and coincided with Troy’s kids’ spring break, so the entire family traveled to Orlando to check out Walt Disney World and SeaWorld. 100 Chapter 2 Cognitive Processes and Ethical Decision Making in Accounting The hospital’s expense reimbursement policy is very clear on the need for receipts for all reimbursements. Meals are covered for those not provided as part of the conference registration fee, but only within a preset range. Troy has never had a problem following those guidelines. However, the trip to Orlando was more expensive than Troy expected. He did not attend all sessions of the conference, to enjoy time with his family. Upon their return to St. Louis, Troy’s wife suggested that Troy submit three meals and one extra night at the hotel as business expenses, even though they were personal expenses. Her rationale was that the hospital policies would not totally cover the business costs of the trip. Troy often has to travel and misses family time that cannot be recovered or replaced. Troy also knows that his boss has a reputation of signing forms without reading or careful examination. He realizes the amount involved is not material and probably won’t be detected. Kristen is approached by Joyce, the head of the accounting department, about Troy’s expenses, which seem high and not quite right. Kristen is asked about the extra night because she did not ask for reimbursement for that time. Kristen knows it can be easily explained by saying Troy had to stay an extra day for additional meetings, a common occurrence for administrators, although that was not the case. She also knows that the hospital has poor controls and a culture of “not rocking the boat,” and that other employees have routinely inflated expense reports in the past. Assume you, as Kristen, have decided the best approach, at least in the short run, is to put off responding to Joyce so that you can discuss the matter with Troy. Answer the following questions. Questions 1. What are the main arguments you feel Troy will make and reasons and rationalizations you need to address? 2. What is at stake for the key parties in this situation? 3. What levers can you use to influence how Troy reacts to your position in this matter? What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?

Answer 1

1. Troy may want to argue that he has been a long time employee, the amount is not material, it is only one night, everyone else does the same, and that he will cover for Kristen in the future. Kristen will need to be prepared to counter each of those rationalizations. She may explain in fairness to other employees, the firm cannot pay personal expenses for one employee but not for others. She can also want to explain why she does not want to go against her values of honesty, integrity, responsibility, and trustworthiness.
2. The key parties in the case are Troy, his wife, Kristen, Joyce, and the hospital.
   
   Troy has his performance reviews and status as a supervisor at stake. He and his wife also have at stake the reimbursement of expenses
   
   Kristen as a new employee is in a position of having to lie about the expenses or act as a whistle-blower on Troy. If Kristen chooses to lie for Troy, it may be the start of the slippery slope and she may be expected to lie more in the future or about larger amounts. If Kristen chooses to act as a whistle-blower she may have trouble fitting in at work and finding work friends. Kristen may wish to take a neutral option of giving the conference schedule to the accounting head so that Troy would have to explain instead of her.
   
   Joyce and the hospital have an ethical obligation to apply the firm’s policies in a fair manner to all employees. The way in which this matter is handled will say a lot about the culture of Gateway Hospital.
   
3. Kristen should appeal to Troy to be honest and fair to all concerned by paying his own personal expenses from the trip. Kristen should emphasize that at this point no harm will likely come to Troy if he steps forward and explains to Joyce that he made a mistake asking for reimbursement for that one day. He wants to correct the record. The sooner he does this, the better. He will also maintain his integrity. Kristen should also point out to Troy that his wife and family are depending on him to provide for their well-being. Is the amount of one personal day in Orlando worth possibly losing your job? She also should point out that following policies helps the hospital maintain fairness to all employees. Troy should do the right thing for its own reward and to set an example to his children.
   
4. Kristen should appeal to Troy not to have the matter to go higher in accounting department or be reported to the president. She should mention that although he is a long time employee that does not entitle him to steal from the hospital by using the company’s reimbursement procedures to mask personal expenses. If the amount is immaterial as Troy is stating, then it should not be a hardship for Troy to pay it himself. If the hospital is having employees charging personal expenses as covered travel expenses as a standard practice, then the hospital needs to review its policies and internal controls over travel. Troy may think this is a one-time lie on his expense account, but it could be the start of his ethical slippery slope, e.g., when Troy first decides to deceive others by consciously covering up or lying about past behavior. Kristen needs to be prepared to rebut the loyalty argument made by Troy. Pressure from a superior can lead to a decision whether to act in accordance with stage 3 or at a higher level of moral reasoning. Kristen also should make it clear to Troy he is putting her in a difficult position and stress the unfairness of Troy’s actions and his request to go along with reimbursement for the extra day. She could ask Troy how he would feel if their roles were reversed. Would Troy cover for Kristen? If he says “yes,” then Kristen should have no hesitation in taking the matter up the chain of command. This is a situation where Kristen must be true to her values and make sure she voices them as high in the organization as is necessary to make it clear she does not condone what Troy has done. This may mean going to top management to discuss the matter.