Post-dating a check is a popular practice used to circumvent certain financial limitations. However, when utilized on the organizational scale, the action has considerable ethical considerations and may be harmful to a wide range of stakeholders. The following paper analyzes the ethical issues associated with check post-dating and identifies the options available to Tabitha Andes.
The main ethical consideration in this case is the issue of unfair accounting practices. Pete Wilson, the current treasurer of Southside Stores, persuades his assistant, Tabitha Andes, to engage in fraudulent activities by delaying the mailing of checks prepared net of discount. Two aspects of this practice raise ethical concerns. First, Pete Wilson instructs Tabitha to date the checks with the last day of the discount period. This action, known as “post-dating,” can be used for a variety of purposes, including the unlawful ones (Pritchard, 2018). Once such practice is detected by a business partner, it can lead to legal action. In addition, post-dating a check compromises the validity of financial information and, by extension, violates the integrity of the company’s accounting practices.
Second, and, perhaps, more importantly, Pete explicitly states the intention of obtaining unfair advantage by delaying the delivery of checks beyond the termination of respective discounts. By postponing the mailing, it becomes possible for the company to cut the losses by retaining the interest on the corporate funds. According to the treasurer, the majority of the creditors are willing to ignore the incurred losses in order to retain a valuable customer (Kimmel, Weygandt, & Kieso, 2015). Thus, the delay can be attributed to the inefficiency of a post office.
Several stakeholders can be harmed by the suggested practice. First, the recipients of the delayed check will lose interest corresponding to the duration of the delay. In the example used by Pete Wilson, postponing the delivery by four days will provide the treasury with four days of interest, with a corresponding loss on the part of the creditors. Second, Tabitha may be harmed by complying with Pete’s suggestion. As was explained above, once the intentions nature of the delay becomes apparent, it is reasonable to expect legal action from some of the creditors. In this scenario, Tabitha will be held responsible for the unethical actions and the incurrence of losses by the partners.
The described scenario also introduces the risk of legal action against the entire treasury department. Pete’s welcoming message implies that unethical and unfair practices are not uncommon in the team. Thus, an investigation conducted by the auditors may reveal other fraudulent activities aimed at maximizing profits of the company. By extension, company’s reputation can be severely compromised once the issue is brought up in the media.
Interestingly, according to the current treasurer, the practice is ultimately beneficial for the company from the financial perspective. Hypothetically, the chance of getting several additional days of interest on the check does have a positive effect on financial performance. Nevertheless, the potential negative impact negates the advantages of such an approach in the long run. Following this line of reasoning, Pete Wilson can be listed among the benefitting stakeholders. However, this advantage is still ethically flawed and will be eliminated once the information becomes public.
Thus, three options are available to Tabitha. First, she can disregard the advice of Pete and follow the recommended invoice procedures. Second, she can discuss the issue with Pete and the management in order to eliminate the risk of legal action and reputation damage. Third, she can comply and continue the practice started by Pete. Evidently, first and second options put her career at risk. Nevertheless, as was explained above, the long-term effects of the third option present greater risks.
References
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2015). Financial accounting: Tools for business decision making (8th ed.). Danvers, MA: John Wiley & Sons.
Pritchard, J. (2018). Postdated checks. Web.