Ethical case study, Finance manager, Personal Care Products
The issue facing Lisa as the Finance manager of the Home and Personal Care Products is proving to the CFO of the company that was acquired why the marketing costs were not to be capitalized. She was concerned about maintaining ethical standards when the acquired company was coming together with the parent organization. According to the IMA guidelines that are used for resolution of an ethical conflict, Lisa is supposed to discuss the conflict with her immediate supervisor who is Jeffrey Anderson.
She was more concerned to know if the acquired company had used inappropriate accounting practices to inflate their earnings or sales. She took the initiative to consult Jeffrey Anderson and was well prepared with the accounting manual of the parent company and also the plan for valuation of the assets that belong to the company. Since, Jeffrey Anderson was a respected individual in the company, having served for more than a decade Lisa expected that he would have advised her on the way to approach the issue professionally to find a solution and also to maintain confidentiality and integrity.
[...] Anderson is quick to assert that Lisa does not understand and comprehend the business, and the journal entries are standard practice. He claims that if Lisa understood the nature of uncertainty of the prestige fragrance business, she would be able to go in line with what the company wants. The dilemma that Lisa faces is how to challenge Mr. Anderson ad keep the acquired team close to her. She is also not ready to lose the trust of both the finance team and Mr. [...]
[...] Lisa took the expected measure and consulted Anderson after she made these discoveries. Mr. Anderson does not seem to take the issue as an urgent matter. Instead, he rubbishes Lisa's claim by saying that it is not a significant issue, and she should not worry about it. Lisa gets stuck since, Anderson is her immediate controller of her department, and she has to follow his directions. She Is however concerned about the ethical standards of the issue at hand since she knows well that if she approves the acquired company with the issue of capitalized costs, she will at some point be answerable when evaluation is done. [...]
[...] Discussion The acquired company and the parent company are the main stakeholders in the issue that Lisa is trying to get solutions for. Lisa finds herself unprepared for the cultures within the corporate, and she did not believe that the acquired firm had used the appropriate financial rules and regulations. She was tasked to make sure that the assets of the corporate she was working for were secure. Lisa noted that the employees were more concerned in securing their jobs. [...]
[...] Lisa is keen not to abandon the ethical standards in the company as the finance manager. In her line of work, Lisa focused on the acquired assets and noted the unusual high proportion of some of the assets that were indicated in the balance sheets. Most company managers will tend to overlook this section for the reason that the items in that category are noncore assets. Lisa found it hard to determine the nature for the items that were on the list of the acquired company and how they were relevant to the company's activities. [...]
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