Introduction
Decision-making is often a process that most people make unconsciously. In whichever process, every decision carries with it moral sensitivity and dilemmas (Dubbink 2011). This paper looks at a case study in which the financial controller of a large corporation is faced with such a process. Help Our Homeless Offspring (HOHO) intends to increase its donor funding but has to meet certain conditions and fundraising legislation.
One of the conditions HOHO has to keep its expenditure-to-funding ration below 25 per cent. However, the organisation intends to use TV advertising, which exceeds the funding limit. The Chief Financial Officer (CFO) is optimistic that the excess is short-term and that they will meet the conditions ultimately. The decision remains with the financial controller of the donor-corporation who is tasked with advising its organisation on whether to grant the funding.
Stakeholders
The financial controller is the major stakeholder in the decision making process. He is aware of the misallocation of costs by HOHO, and can choose to either do nothing or correct the situation. HOHO is another major stakeholder. It has goals and objectives that it must achieve for it to remain functional. It needs funds to finance its activities, but its integrity is tested on how it is going to acquire these donations. The upper management is the decision-making organ of HOHO. The donor-corporation is another stakeholder and working on the recommendations of its financial controller, it may decide to grant funding to the charitable organisation or deny their request based on integrity issues. CFO is the architect of the idea to use TV advertising, and strongly justifies the need. The accountant is also involved. He detects the misallocation of administrative costs and feels that it exceeds the 25 per cent limit. The Homeless Offspring are at the centre of the decision-making process for the decision made will directly affect them. The last stakeholder is the community. In the event that the organisation is not funded, the community will have no option but to take up the responsibility of funding the organisation.
Ethical Issues
The major ethical issue surrounds the ethical behaviour of the upper management of HOHO and the CFO. An organisation cannot claim to be ethical if it ignores ethical codes. Integrity is one of the fundamental principles that are required in business professionalism (Accounting Professional & Ethical Standards Board Limited 2010). A dishonest transaction, specifically falsification, is unlawful and deceptive in every manner.
The case study also brings into light the financial controller’s responsibility to his organisation. He is aware of the TV expenditure and knows quite well that it exceeds the laid limit by his organisation. He informs his employers or lets HOHO present the falsified information. He has a duty to the organisation, but his own integrity is also at play. Principles of technical and professional standards require him to inform his organisation of the misallocation of funds by HOHO (Knouse & Giacalone 1992).
Alternative courses of Action (Consequences)
Doing Nothing
If the financial controller chooses not to take any action, he would certainly breach all the fundamental principles of professional conduct. Ignoring any course of action could result in unfavourable financial consequences to both his corporation and that of HOHO. It would further bring into question his professional integrity (Guy 2008).
Telling the corporation about the situation
This may help his corporation take necessary steps and correct the unbecoming situation. It may also lead to the disqualification of HOHO from the charitable funding. Consequently, the financial controller would have also preserved his integrity. Telling the corporation about the situation and explaining the consequences could see the financial controller rewarded for his professionalism. His advice on the consequences could help the organisation conduct further investigation or make a decision based on the same.
Encouraging the corporation to work with HOHO
This course of action would bring into question his professional integrity. However, it may give HOHO an opportunity to explain to the donor-corporation why it had settled on expensive advertising even though it exceeded the 25 per cent limit.
Conclusion
The financial controller has an obligation to inform his corporation of any misallocation of funds by HOHO. However, before taking this course of action, he could try giving informal advice to the upper management of HOHO and its CFO to observe the fundraising legislation. If they fail to take any action, then he could proceed to inform his corporation of the misallocation and possible consequences of breaching those principles.
Reference List
Accounting Professional & Ethical Standards Board Limited (APESB): APES 110 Code of Ethics for Professional Accountants, 2010, Web.
Dubbink, W 2011, European Business Ethics Casebook: The Morality of Corporate Decision Making, Springer, New York.
Guy, M 2008, Emotional Labour: Putting the Service in Public Service, M.E. Sharpe, New York.
Knouse, S & Giacalone, R 1992, ‘Ethical Decision-Making in Business: Behavioural Issues and Concerns’, Journal of Business Ethics, vol. 11, no. 5/6, pp. 369-377.