Debby Arteaga Section A2 October 25, 2018 This Case Is Not A

Debby Arteagasection A2october 25 2018this Case Is Not About A Proble

Debby Arteaga Section A2 October 25, 2018 This case is not about a problem or a situation that I am facing, but about a problem that my store manager has faced within the past week or so. I work for a company whose mission is to sell quality goods and services at a low cost. We have many departments and many managers that manage those departments. And like any store there are employees who purchase items at a marked down price or buy the item at the original price and later on get an adjustment. A problem occurred when a Merchandising manager came in to return a couch that he had purchased a couple years ago.

He came in with the original receipt, which stated that he purchased the couch for the original price. The problem was that he had failed to mention that he had gotten a price adjustment for the couch, which the receipt didn’t show and was refunded for the original amount. He told the refund clerk that he had purchased the couch at the original price and to continue to process the return. Because the system showed the couch was at a marked down price, the refund clerk had to ask for a key from a supervisor or a manager. A key is given as an approval of the price when the price of an item has changed.

A supervisor came and asked what the key was for, she asked the Merchandising Manager if the price was the actual price that he had paid for. He said yes, but she was hesitant to give him the key. She asked a second time and he showed her the receipt and told her to approve the amount. A few weeks go by and the Merchandising Manager is called in to the office. When he was told that he was going to be fired, he hired a lawyer and threatened to expose managers, supervisors, and employees who have committed the same crime.

Anytime an employee is on the verge of being fired, a file containing details of the incident has to be sent to corporate. There the legal team along with other authorities review the case and decide on whether or not to fire the employee. For this case they decided to demote the manager and give him the option of staying at the current location as a cashier, or transfer to another location as a stocker.

Paper For Above instruction

The scenario involving the merchandising manager's return presents complex issues related to ethical conduct, internal controls, and organizational responses to misconduct. This case underscores the importance of implementing effective control systems and establishing a clear ethical framework within retail organizations to prevent, detect, and address fraudulent activities or misrepresentations.

At its core, the incident highlights how gaps in internal controls can expose a company to risks associated with employee dishonesty. The system’s requirement of managerial approval ('the key') for refunds in cases where the price has been adjusted is designed to prevent unauthorized refund transactions. However, the manager’s ability to present a receipt that omits crucial information about a prior price adjustment exposes a weakness in the control mechanism—namely, that the receipt alone does not provide sufficient verification of the actual transaction history or adjustments made.

Applying management concepts such as internal controls and ethical standards is crucial here. Internal controls, particularly preventive controls like requiring managerial approval, are intended to restrict unauthorized refunds. Detection controls, such as audit trails or transaction verification processes, could have identified discrepancies earlier. Ethical management emphasizes accountability and integrity, promoting a culture where honesty is valued over short-term gains. When employees observe a culture that tolerates or overlooks misconduct, it erodes control effectiveness and can encourage similar behavior.

The case also involves the role of leadership in setting the tone at the top. A strong ethical tone fosters a work environment where employees feel responsible for maintaining integrity, knowing that dishonest actions will result in consequences. The organization's response—escalating the incident through documentation, involving legal counsel, and ultimately demoting the manager—aligns with the principles of ethical leadership. These actions serve as a deterrent and reinforce standards of conduct.

Furthermore, the company's decision to inform corporate headquarters and involve legal teams signifies the importance of transparency and due process. Proper documentation of incidents ensures that management decisions are based on facts and that the organization mitigates legal liabilities. It also exemplifies the application of feedback controls—evaluating the effectiveness of the internal policies after an incident and making adjustments to prevent recurrence.

To address such issues proactively, organizations should consider strengthening internal control systems, such as implementing transaction histories that track adjustments and refunds comprehensively, and training staff on ethical standards and reporting mechanisms. Regular audits and surprise inspections can also serve as deterrents. Establishing a clear code of ethics and ensuring all employees understand the importance of integrity can create an environment where misconduct is less likely to occur and more likely to be swiftly addressed.

Conclusion

The case emphasizes the significance of internal controls, ethical leadership, and organizational culture in preventing fraud and misconduct. By enhancing verification processes, fostering an ethical climate, and implementing rigorous review procedures, retail organizations can better protect their assets, uphold their reputation, and maintain trust with customers and stakeholders.

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