Task 01 Cutting-Edge LLC is company formed in January 2018 by Mr Stephen, which designs and installs high technology computer numerical control capital equipment used by many large companies. Mr. Stephen, is an IT engineer, who has several years of experience in the field before starting Cutting-Edge. The company does not have a board of directors, strategic decisions are made by Stephen. The venture capitalists, BM Capital has invested $3 million as venture capital to start the business and in return received equity shares of Cutting-Edge. On 15/04/2019 a meeting was held with BM Capital, the venture capitalists to discuss the financial statement for the year 2018.
The extracted information from the income statement is as follows:$ Sales Revenue 1,000,000 Cost of sales (450,000) Gross Profit 550,000 Administrative, installation & servicing expenses (400,000) Marketing cost (including development of export market)
(50,000) Net Profit 100,000 During the meeting Stephen requested for additional capital from BM Capital, for expansion of business. By raising the concern on the inability of the management to increase customer orders and earn profit, BM Capital did not accept the proposal given by Stephen. After the financial review meeting held with the Venture capitalist, Stephen decided to concentrate more on marketing side of the business. Therefore, he hired Thomas to the position of Financial controller and appointed Andrew, the Certified Management Accountant to the position of Assistant Accountant. Andrew is responsible for tracking purchase orders, sales invoices, cash receipts and cash payments.
During the initial check Andrew discovered that $ 800,000 of accrued expenses had not been recorded in the financial statement for the year ended 31st December 2018. Andrew informed Thomas, the financial controller about the uncovered accrued expenses, and Thomas tried to coverup the matter by informing Andrew that the $800,000 of expenses and liability could not be recorded. Also, Thomas went further by warning Andrew of the consequences if he pursues the matter any further. As the BM Capital disagree to inject additional capital for the expansion of business Stephen had decided to go for a bank loan.
Requirement Assume you were in Andrewâ€™s position at Cutting-Edge LLC, resolve the ethical dilemma using Giving Voice to Values (GVV) technique. (Maximum 750 words)
the requirement of this task is in the picture.
Being ethical in the face of wrongdoing Experts offer advice on how to react if you become aware of dubious practices or behaviour. By Andrew MacDowall 30 January 2020
Complex accounting procedures and mastering new technology are not the only challenges that finance professionals face at work. The #MeToo movement, growing environmental awareness, the spread of social media, and a series of fraud scandals at major companies have thrown the spotlight sharply on
business ethics in recent years.
FM magazine spoke to two experts about what steps financial managers can take to address â€” and prevent â€” unethical behaviour and activities in the workplace.
Evaluate the situation.If you feel that the organisation that employs you is working unethically, or otherwise encounter what you consider to be unethical conduct in the workplace, it is worth considering why you consider it to be unethical and the impact it is having.
â€œThe definition of â€˜unethicalâ€™ can be a personal, cultural, or professional thought process, or two or more of these,â€ said Cathy Monaghan, head of HR at UK-based employee benefits, HR, and wellbeing service provider PES. â€œWe all have personal values which influence how we operate and our expectations of others, including our employer. If we work in an environment which we perceive as being unethical, then firstly we should evaluate what is happening. If you find the â€˜unethicalâ€™ behaviour is against your personal, but not professional, values, then you should look to find a new employer.â€
It is also worth considering whether the behaviour or activity is indeed unethical in its cultural context.
â€œCultural influences should be taken into account in your evaluation, as what is acceptable in, say, Taiwan â€” which has a very strong culture of presenting gifts to people â€” may not be acceptable in the US,â€ said Monaghan.
Seek advice: â€œIt can be difficult to know the best way forward, which will be affected by the culture of your organisation, your role, and so on,â€ said Monaghan.
If financial managers believe that unethical activities are taking place, a range of resources are available to offer support. The first port of call should be internal policies or procedures that might offer guidance. Alternatively, some companies have an ethics department, or HR may be able to help.
Another source of information and guidance is the CIMA Code of Ethics, which applies to all members and students. CIMA also offers a range of ethics resources and operates an ethics helpline and inbox where members and students can receive guidance relating to the Code.
Report it: If you believe that the behaviour or practices are unethical, there are procedures for reporting them, varying from country to country and organisation to organisation. This usually follows a scale of escalation, depending on the initial response when reported within the organisation.
â€œSee if you can change it if it is a relatively small matter and not endemic,â€ said Monaghan. â€œRaise it with your manager or director to seek their support. Lots of organisations â€” although they tend to be larger ones â€” have a call line where you can report poor, unethical, or illegal behaviour or conduct in a confidential way; consider using it. And you can check your organisationâ€™s whistle-blowing or â€˜speak upâ€™ policy to see what it suggests.â€
If dealing with the issue internally has been unsuccessful, in certain circumstances it will be necessary to report to the appropriate external body, Monaghan said. These include a suspected criminal offence (including fraud), apparent danger to a personâ€™s health or safety, risk of damage or actual damage to the environment, a miscarriage of justice, possible violation of a law by the company, or possible coverup of wrongdoing.
If you decide to report externally, there may be organisations that can support you through the process, including the charity Protect, which offers free expert advice on UK whistleblowing law and processes.
Prevention is better than cure. Unethical activity is less likely in organisations that have a healthy corporate culture and a solid framework for prevention, and financial managers have a central role to play in this.
However, effective prevention should go considerably beyond this. â€œInstead of just thinking about compliance, the whole approach of how to combat unethical practices in financial organisations should be based on the idea of integrity,â€ said Vaccaro. â€œCompliance is reactive and prohibitive. We need instead to educate people throughout the organisation about fundamental ethical values. This ethical dimension is often missing in organisations, in
how they aim to both train and incentivise employees. Ethical incentives are much more powerful than people typically imagine. To discourage bad practice, the key is nourishing a culture of ethics, respect, and responsibility within the whole organisation.â€
MacDowall, A., 2020. Being ethical in the face of wrongdoing. FM – Financial Management, 30 January.
Requirement: 1. Summarize the article by discussing the steps financial managers can take to address and prevent unethical behaviour and activities in the workplace (Maximum 500 words)
2. The author of this article states that, â€œUnethical activity is less likely in organisations that have a healthy corporate culture and a solid framework for prevention, and financial managers have a central role to play in this.â€Recommend measures that should be taken to establish an ethical culture (Maximum 500 words) Your assignment should be structured as follows â€¢ Title page â€¢ Introduction(1 mark) â€¢ Content o Task 01(15 marks) o Task 02 Requirement 01(6 marks) Requirement 02(6 marks) â€¢ Conclusion(1 mark) â€¢ References(1 mark) â€¢ Annexures (If any) (Total Marks â€“ 30 marks) Specific requirement Maximum 1750 words (excluding annexures), in Times New Roman – font size 12.