“Smoothing” the Factory’s Accounts As the young, newly appointed manager of a chemical plant, Carmen learns that a team of internal auditors from her firm's home office will descend on her factory in two days. She prepares her staff as best she can. The day before the auditors arrive, one of her assistants discovers some disconcerting news. It appears, she says, that William, a 30-year veteran of the plant, has been systematically altering accounts for years. Month by month, William has been shipping products to customers without billing them—and then billing customers without shipping anything. Carmen is stunned. Seeking an explanation, she learns that the practice has nothing to do with fraud. William hasn't been lining his own pockets; he was simply trying to be helpful. His goal was to smooth out the cyclical nature of the orders so that, month by month, the figures sent to the home office appear level and consistent, with no peaks and valleys. On balance, Carmen finds, no money has been lost or gained; it all balances out in the end. And while the amount is not immense, the funds affected amount to perhaps five percent of the plant's annual earnings. In one sense, William's adjustments have benefited Carmen, who has already been complimented by higher-ups for her astute forecasts and for meeting her targets so accurately. But Carmen also knows that if these practices were to come to light, William would be fired instantly—she herself, though ignorant of the practice until now, might have some tough explaining to do. After all, for years William has been fudging records and misstating corporate revenues to management, shareholders, and the IRS. Source: http://www.globalethics.org/business-dilemmas.php

 

Required:

 

 a. Identify the ethical issue in the case.                                                                      

 

b. Define the issue.   

 

  

Answer rating: 100% (QA)

a The ethical issue in the case is of Honesty and integrity b E... View the full answer