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  • Subject Name : Business Ethics

Executive Summary

Business ethics refers to the appropriate rules and codes of conduct that a business is expected to adhere to in its activities and dealings. Ethics in business allow for regulation of proceedings by giving a definite approach of what is acceptable and what is not acceptable. The ethical aspect is dependent on influence, opportunity, place and time. It streamlines the behaviors of companies and business to attain a balance between the needs of the stakeholders and the company’s desire to make profit.

Introduction

In this story the company Marshall Mining Equipment and Services (MME& S) bridges the code of conduct in several times in an attempt to please the client Hugo Marshall. Alex Caldwell started down this path by doing minor changes on Hugo’s accounts to reflect his demands. Hugo got used to that and was pushing him even further on this path with his never-ending demands. Caldwell often pushed his staff to falsify the account reports but most of them could not handle the pressure from Hugo and going against their ethics so they left the firm. Hugo got tired of Hugo’s influence thus started looking for a way out.

Part A: Applying Theories of Ethics

Theory of egoism asserts that individuals have a moral agents that forces them to behave in such a manner that places their self-interest first (Ren - 2019). Fiona Willis found herself in a tight spot upon the realization that among the many local businesses that Hugo had acquired, Metal Fabrication accompany where her husband, was one of them. She considered the issue of ‘conflict of interest’ and even thought of informing her boss about it. However, she had the realization that this would jeopardize her position of authority over the large account which she considered to be of huge importance. She decided to keep quiet about it and hoped that nobody would make the connection and significance. Then again, she does not use her husband’s name which made it difficult to connect the two.

In failing to inform her boss of the possible conflict of interest so she can keep her position, Fiona showed individualistic theory of egoism. Here she placed her personal interests first. This would keep happening if she continued working on the huge company and was presented with a conflict of interest. She is expected to make decisions that would be in favor of her husband since individual theory of egoism also in incorporates people making decisions that may not benefit individuals directly, but benefit the people close to them. This eventually contributes to their individual interest. Fiona’s husband is an intricate part of herself. Moreover her marriage was still very new so she would be compelled to please her husband at all cost. Making decisions that favor him is one way to do it.

Deontology is another theory of business ethics that explores the perception of things or actions as good or bad, which informs decisions (Chen -2019). Fiona would have had to weigh her options based on what is more beneficial to her family. Raising the issue of conflict of interest would have place her young family at a risky position. According to deontology theory, she was compelled toward the decision that best suited her family. She might have also considered the implications of losing her newly acquired position on her family. She was happy and fulfilled with the new role which translates to better family relations. Losing that interest and drive would have had a clear emotional impact on her family.

Fiona should be advised to embrace a more inclusive theory that suggests the consideration of everyone’s happiness. Theory of utilitarianism for instance ( Mudrack, Mason-2019). This involves taking actions that creates the best good for all the related parties. It identifies the idea of good with pleasure and believe that everybody try to behave such that they achieve goodness for all. Fiona was selfish in her actions. She did not consider the rights and needs of Hugo or the company when making her decision to remain silence. It is also unethical to involve one’s self in a matter that presents a clear conflict of interest. She should have come out clean about the issue the first time she realized those possibilities so that they can identify the way forward. Now that the client was complain about her flawed tax accounting, raising such a mater would give him the reason he needed to damage her career and their business.

Caldwell a founder and senior partner of Caldwell, Burns and Burns Public Accountants had done well for himself. He seemed to love what he does and did it well. He had managed to keep his company afloat even when other firms were struggling with fees. Nurturing his relationship with Hugo had been a huge success for his company. The man was loaded and brought a lot of revenue to Caldwell’s company. Caldwell ensured that all his needs where adequately addressed by his firm and this team of accountants. However he had given Hugo so much leeway. He Hugo was mean to the accountants assigned to work with him many of who left immediately after or would not work with him again. Caldwell was forced to put poor Fiona at the tight spot simply because no other more experienced employee would take up the tedious responsibility.

According to the utilitarian theory, Caldwell was supposed to employ means that address the needs of all related parties adequately ( Mudrack, Mason-2019). However he was fixated on impressing Hugo. He ended up pulling strings that left is staff vulnerable to Hugo’s attitude. The fact that most of the staff who dealt with Hugo ended up resigning after their experience with him implies that this was a serious matter that needed to be addressed properly rather than throwing staff after staff at him. Placing Fiona at that vulnerable position was selfish of Caldwell. He was aware that she might not manage to handle the pressure that comes with it, but he did not consider her well-being. In the end it caught up to her.

In his attempt to keep Hugo happy, Caldwell had gone against business ethics buy falsifying Hugo’s accounts. This addresses only the good of one party, MME& S, while all other parties are left vulnerable. The firm was losing its employees by day, his code of conduct was in question and if found out the firm stood to have its license revoked. More so, Hugo was getting more comfortable and audacious in his demand. Caldwell had to take drastic measure to rescue his ship. He needed to review his moral compass with regard to business ethics. He would have to revisit his relationship with Hugo and put a stop the the outrageous demands. He stood to lose Hugo as a client because he has shown him the possibility of falsifying documents, but if he managed to explain the impact of such actions not just to the firm but to Hugo’s businesses, the man would understand. As a matter of fact, Hugo has a lot more to lose if he faces lawsuits on such matters.

Part B: AAA Model of Decision Making

The American Accounting Association model of decision making begins when there is a clear understanding of the matter that is under consideration. In this case, the biggest problem Caldwell is facing is how to deal with his biggest client Hugo who was becoming trouble for his business, his staff and his ethics. He needs to consider ethical knowledge, ethical judgement and ethical behavior in his decision making process. AAA model provides a frame work for making ethical decisions through a series of questions regarding application of ethics (Aagaard, Ritzén -2019 ).

The first stage of the AAA model involves the identification of the case with the preciseness that does not leave room for ambiguity concerning the matter under consideration. The next part of the process is the identification of the ethical issues involved. Examination of the facts related to the case and the ethical issues being addressed. The third step involves the identification of the principles, norms and values relating to the case. The decision is viewed from the perspective of social, ethical and professional code of ethics. The social expectation of norms, principles and values is also addressed.

The fourth step involves the identification of alternative course of action in order to ensure that each expected outcome is considered in spite of its implications. The fifth step involves comparing the values identified in step 3 against the options in step 4 to assess how the options accord with the norms. The sixth step involves consideration of the possible outcomes before the final decision is made on the seventh step.

Step 1; the facts of the case are that Hugo has become a huge problem for Caldwell. He has numerous demands that have a negative effect on Caldwell’s business. Recently his demands have been increasing, asking Caldwell to falsify bigger documents, which means he is getting out of hand. Step 2; the ethical issues in this case is whether Caldwell should continue adhering to Caldwell’s demands. In so doing, he will continue placing his staff at the mercy of Hugo. This is unethical because he knowingly exposes his staff to unhealthy working condition.

He also engages in falsifying information which is against the business code of conduct and ethics. Step 3; the norms, principles and values of business conduct are the sequence of actions that safeguard the interest of the clients and the stakeholders. Caldwell had been biased in his dealings with Hugo. He had addressed his needs while putting the business and his own staff at risk. He had also broken the law by falsifying tax reports to portray compliance. He also allowed Hugo to bully his staff into unethical behavior of falsifying tax reports.

Step 4; the alternative courses of action are: Option 1 is for Caldwell to continue giving Hugo the attention he needs and bully his staff sometimes into accepting Hugo’s demands. Option 2 is to overrule Hugo's outrageous demands, save his staff from unnecessary torture in the hands of Hugo and deal with the consequences. Step 5; the best course of action consistent with norms principles and values of business ethics and conduct is to stop bowing down to Hugo and confront him to start abiding to tax laws as well as to stop bullying Caldwell’s staff.

Step 6; the Possible consequences of option 1 is that Caldwell would accept Hugo’s demands once again. He would provide him with a very nice report of tax compliance. Hugo would be very happy and continue bringing revenue to the firm. The firm wound be very successful among other firms. Caldwell could also lose one more staff member and live in the fear of Hugo being found and exposing his business. Option 2would lead to overruling Hugo’s demands. He would be furious and maybe threaten to leave the firm. However it would bring sanity back to Caldwell’s life and firm. Step 7; the ethical decision is for Caldwell to overrule Hugo’s demands.

Part C: Using Apes 110

APES 110 is a code of conduct for professional Accountants. It focuses on development of law for professional and ethical standards in the public’s interest. They identify and deal with non-compliance with the set laws and regulations among clients and employees. APES 110 consists of three parts. The general application of the code, the members in practice part and the members in business part. General application establishes the main principles in professional ethics. The members are provided with a framework they can use to identify compliance threats thus safeguard or reduce them to more acceptable levels. The fundamental principles for both the clients and professionals include integrity, objectivity, confidentiality professional behavior, professional competence and dues care (Mladenovic, Martinov-Bennie, Bell -2019 ).

APES 110 provides a worthy framework for the members to identify possible business threats in relation to compliance with the fundamental principles. Categories of threats include self-interest, self -review, advocacy familiarity treat as well as intimidation. Following clear identification of the treats, comes the implementation of measures to safeguard the business by reducing or eliminating the threat. A conflict of interest also poses a considerable amount if threat to the fundamental principles with regard to professional activities. Upon the identification of possible threats, safeguarding measure to be undertaken include training of the professionals, continuation of professional development, conducting of internal reviews, application of professional standards and regulating disciplinary procedures.

According to this story, the fundamental principles were lacking for many people (Birchall -2019). The client Hugo lacked integrity. He was dishonest in his dealings and often bullied is accountants into portraying the results that he wanted. Caldwell also lacked professional integrity. He falsified tax reports for Hugo. Boy Hugo and Caldwell lacked professional competence and due care. While Hugo bullied his accountants, Caldwell encouraged his behavior. They both lacked professionalism as they broke business laws and regulation. Besides the obvious lack of the general fundamental principle among they presented other threats to the business.

Hugo posed a huge self-interest threat. When he needed is accounts depicting something that was untrue, he bullied his accountants to make it happen. Caldwell also let Hugo have his way the cause he was a good source of revenue for his business. Caldwell did not seem to mind that Hugo was driving away his employees as long as Hugo stayed with his firm. Hugo posed another threat of self-review. He consistently had Caldwell falsifying tax reports and never considered its impact. Caldwell knew Hugo was bullying his staff and forcing them to falsify his tax reports but he did not consider what that meant for the employees.

Caldwell was an advocacy threat. In his attempts to keep Hugo in his company, he had promoted him to the point of compromising the objectives of other members. For instance some staff members where frustrated to the point of leaving their jobs which was probably their main source of income. Hugo can also be associated with intimidation threat. Whenever he needed to fix his tax problems, he turned to his accountants. He bullied, frustrated and intimidated the accountants to the point of accepting his demand. Thus the staff members were forced to act against their ethics. Caldwell also applied his position as the boss to force his staff into satisfying Hugo’s demands even when it meant going against their ethic. Fiona provided a threat to conflict of interest that would have caused her to go against the fundamental principles of professionalism.

Safeguarding the firm from Hugo’s influence would call for re-evaluation of the business code of conduct and the fundamental principles. Education and professional training would go a long way into identifying the fundamental principles of professionalism. The firm needed to have regulatory monitoring to ensure that their businesses were conducted according to professional procedures and disciplinary actions applied to non-compliant members. Regular reviews by external bodies would force the firm members to conform to professional business ethics (Birchall -2019).

Conclusion

Business ethics refers to set rules and codes of conduct that businesses adhere to in their activities and dealings. Businesses may face some threats that cause them to be conducted in unprofessional behaviors. It is paramount to identify the threats early enough in order to safeguard the business. APES110 offers a method for the identification of threats and way of safeguarding businesses from clients and members who lack the fundamental principles thus exposing the business to unethical and unlawful conduct.

References

Aagaard, A., & Ritzén, S. (2019). The critical aspects of co‐creating and co‐capturing sustainable value in service business models. Creativity and Innovation Management.

Chen, Y. (2019). Deontology to Judge the Ethical Business Actions: The Case of Takata. Open Journal of Business and Management, 7(2), 783-787.

Birchall, D. (2019). The Consequentialism of the UN Guiding Principles on Business and Human Rights: Towards the Fulfilment of ‘Do No Harm’. Electronic Journal of Business Ethics and Organization Studies.

Mladenovic, R., Martinov-Bennie, N., & Bell, A. (2019). Business students’ insights into their development of ethical decision-making. Journal of Business Ethics, 155(1), 275-287.

Mudrack, P. E., & Mason, E. S. (2019). Utilitarian traits and the Janus-Headed model: Origins, meaning, and interpretation. Journal of Business Ethics, 156(1), 227-240.

Ren, L. (2019, July). The Application of Experiential Teaching Method in the Teaching of Business Ethics. In 2019 4th International Conference on Humanities Science and Society Development (ICHSSD 2019). Atlantis Press.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Ethics Assignment Help

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