Current Ethical Issues in Managerial Accounting Case Study
CASE STUDY: FEELING PRESSURE TO ENGAGE IN FRAUDULENT ACTIVITY
Outline of the case
You have recently relocated to an urban form of settlement to look for better job placements. After immense effort, you have finally found a financial accountant job opportunity that you apply for. You pass the interview and are hired as the financial accountant of a medium sized urban private company. The company provides hospitality and tourism services with five hotels under its assets. The company is a family-owned business with both the husband and wife actively participating in the daily operations of the company.
With positive determination, you make a point of having a good first impression enough to have a good working relationship with the directors of the company as well as other staff members. In your personal research, you note that the directors of the company as well known in the urban settlement. However, since you are still in the probationary stages of your employment, you limit your evaluation to a reasonable level to avoid overlooking into the company’s affairs. Your evaluation of the financial position of the company reveals cash flow difficulties faced by the company prior to your appointment to the post of the financial accountant. Nonetheless, a remortgaging arrangement assumed by the company has significantly decreased its financial pressure.
On a particular day, the managing director of the company approaches you bearing in his hand a cheque for $6000 that already has his signature scribbled on it. As per the protocol of the company, the managing director asks you to counter-sign the cheque that is a deposit for the purpose of furnishings for some of the bedrooms of the hotels owned by the company. As required for such transactions, a formal invoice from a supply chain company exists. This strikes you as bizarre since, during your evaluation and counterchecking of listed transactions, there is no such outlay that had been planned by the company. However, since you are relatively a novel employee, based on your judgment of the explanation given by the managing director and the invoice as evidence you go ahead and counter-sign the cheque.
In an attempt at tying up loose ends you decide to conduct some research into the supply chain company. Your research evinces a high level of indebtedness of the supply chain company. In addition, the secretary of the company turns out to be the niece of one of the directors of the company you work for. In just a span of three days, the managing director approaches you once again with another cheque, only that this time it is for $45,000. He immediately asks you to counter-sign the cheque bearing with him evidence of an invoice from the same supply chain company. From the knowledge about the supply chain company, you found the other day you become hesitant. However, the managing director is very persistent claiming that the only reason he needs you to counter-sign the cheque is because his wife is not available at the moment. His major concern is that the cheque should be submitted promptly so that it can be banked before 30th May.