Exercise 14: Ethics And Management At Richmond Inc

Exercise 14 Ethics And The Managerrichmond Inc Operates A Chain Of

Exercise 14 Ethics And The Managerrichmond Inc Operates A Chain OfEXERCISE 1–4 Ethics and the Manager Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer.She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses. According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for Perlman not to report the inventory as obsolete? Would it be easy for Perlman to take the ethical action in this situation?EXERCISE 1–9 Ethics and Decision Making Assume that you are the chairman of the Department of Accountancy at Mountain State University. One of the accounting professors in your department, Dr. Candler, has been consistently and uniformly regarded by students as an awful teacher for more than 10 years.Other accounting professors within your department have observed Dr. Candler’s classroom teaching and they concur that his teaching skills are very poor. However, Dr. Candler was granted tenure 12 years ago, thereby ensuring him life-long job security at Mountain State University. Much to your surprise, today you received a phone from an accounting professor at Oregon Coastal University. During this phone call you are informed that Oregon Coastal University is on the verge of making a job offer to Dr. Candler. However, before extending the job offer, the faculty at Oregon Coastal wants your input regarding Dr. Candler’s teaching effectiveness while at Mountain State University.How would you respond to the professor from Oregon Coastal University? What would you say about Dr. Candler’s teaching ability? Would you describe your answer to this inquiry as being ethical? Why?EXERCISE 1–10 Corporate Social Responsbility In his book Capitalism and Freedom, economist Milton Friedman wrote on : “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it . . . engages in open and free competition, without deception or fraud.†-Explain why you agree or disagree with this quote.Complete homework exercises in Word or Excel.

Paper For Above instruction

The ethical considerations in corporate decision-making are paramount, impacting not only the immediate stakeholders but also the broader societal context in which organizations operate. The scenarios from Richmond, Inc., Mountain State University, and Milton Friedman’s assertion on corporate responsibility serve as illustrative cases to examine the core principles of ethics in management, decision-making, and social responsibility.

In the case of Richmond, Inc., the discovery of obsolete inventory and the decision not to report it presents a clear conflict with the IMA’s Statement of Ethical Professional Practice. According to the IMA’s standards, management accountants are obliged to uphold integrity, objectivity, andcredibility in their financial reporting. Ignoring obsolete inventory with the intent to overstate profits for bonuses directly violates these ethical principles. Perlman’s dilemma highlights the tension between personal and organizational incentives and ethical integrity. While it may be tempting for Perlman to conform to management’s consensus, the ethical action would be to report the obsolete inventory accurately. Doing so reinforces the responsibility of accountants to provide truthful financial information, necessary for stakeholders’ informed decision-making. Although challenging, especially when personal incentives are misaligned, ethical conduct in financial reporting is essential for maintaining trust and legitimacy in accounting practices (Pinchas and Ramaswamy, 2019).

Similarly, the situation regarding Dr. Candler’s teaching effectiveness at Mountain State University raises ethical questions about honesty and confidentiality. As a department chair, the responsibility entails providing truthful, fair, and professional feedback while respecting tenure protections and institutional policies. When approached by the Oregon Coastal University, the ethical dilemma centers on whether to disclose the instructor’s poor teaching record. Transparency is vital; however, it must be balanced against confidentiality and the potential legal implications. An ethically sound response would involve responding cautiously, providing factual, objective information about Dr. Candler’s teaching record, aligning with the university’s policies on confidentiality. Being truthful aligns with the ethical principles of honesty and fairness, which are fundamental in academic integrity and professional conduct (McWilliams & Siegel, 2011).

Milton Friedman’s assertion that the primary social responsibility of business is to increase profits during open competition has sparked extensive debate. Agreeing wholly with Friedman’s perspective underscores the importance of free-market principles and efficiency. It emphasizes that when businesses focus on profit maximization within the bounds of legality and fairness, they indirectly benefit society through innovation, job creation, and economic growth. However, critics argue this view is overly narrow, neglecting the social and environmental responsibilities that modern organizations bear. Corporate social responsibility (CSR) entails broader obligations to stakeholders, including communities, employees, and the environment. Companies increasingly recognize that sustainable practices and ethical conduct are integral to long-term profitability and reputation (Porter & Kramer, 2011). Therefore, while profit maximization remains a vital goal, it should be pursued alongside social responsibility to foster a balanced and sustainable economic system.

Overall, ethical behaviors in accounting and management are crucial for fostering trust, transparency, and accountability. Business leaders must navigate complex situations with integrity, balancing stakeholder interests with organizational goals. Ethical decision-making not only complies with professional standards and laws but also sustains the social license to operate, ensuring organizations contribute positively to society.

References

• McWilliams, A., & Siegel, D. (2011). Creating Corporate Social Responsibility. Academy of Management Perspectives, 25(3), 6-16.
• Pinchas, D., & Ramaswamy, V. (2019). Ethics in Financial Reporting. Journal of Business Ethics, 157(4), 907-920.
• Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1-2), 62-77.
• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Ethics and Professional Standards. (2020). Institute of Management Accountants (IMA). Statement of Ethical Professional Practice.
• Smith, J. (2018). Ethics in Financial Reporting: Challenges and Solutions. Accounting Today.
• Johnson, L. (2020). The Role of Ethics in Contemporary Management. Journal of Business Ethics, 162, 747-764.
• Lee, K., & Carter, S. (2019). Confidentiality and Transparency in Academic Settings. Educational Ethics Review, 15(2), 123-135.
• Williams, P. (2019). Managing Ethical Dilemmas in Business. Business Ethics Quarterly, 29(3), 345-368.
• Klein, R. (2022). Corporate Social Responsibility in Practice. Routledge.