Solved: Jeffry Smythe has been recently appointed as chief accountant in a small Australian

Jeffry Smythe has been recently appointed as chief accountant in a small Australian engineering company, Turners Engineering Ltd. Turners manufactures machine parts which are primarily used in the mining industry in Western Australia and Queensland. Turners has been facing difficulties lately as the mining industry has gone into decline due to a slowing global economy and falling commodity prices.

The previous chief accountant, Richard, left the job one month ago citing ill health. Jeffry was employed at short notice on a probationary basis while the directors made a decision as to whether to continue his employment or find someone else. Jeffry discovers that Richard was not especially well organised in his accounting work and finds it difficult to track down all of the working papers used to support the draft year-end accounts. After a lot of searching, Jeffry finally tracks down all of the supporting documents and begins to review the figures in the draft accounts.

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During this process, Jeffry discovers a small number of sales journal entries which have minimal evidence to support them – including no evidence of any cash being received. These suspect journal entries were posted 7 months ago and in sum increase Tuners turnover by 22%. The journals make reference to the ‘Dean’ project. Jeffry has never heard of this project and so decides to contact Bruce, the Chief Executive of Turners.

Bruce tells Jeffry that the Dean project related to the one off sale of machine parts to a company based overseas. Bruce goes on to say that only a few people know about the contract, as there are number of trade embargoes in place against the sale of goods of this nature to businesses in this particular country hence the normal sales approval process was not followed for the Dean project.

Jeffry thanks Bruce for the information but asks why no cash has ever been received for the order. Robert agrees that no payment has yet been received but assures Jeffry that it will be received eventually as the debtors are very wealthy and he is disinclined to chase them up aggressively as it might jeopardise their relationship and thus limit the potential for future orders. Bruce goes on to ask Jeffry not to bring this matter up with anyone, including the auditors and, then mentions that he, and a number of other influential people within Turners have share option bonuses due in a few months time and Jeffry probably wouldn’t want to go upsetting anyone over such as minor matter, especially if he sees a future for himself with Turners.

a) What are the ethical issues facing Jeffry?
b) Briefly define the ethical perspectives of teleology and deontology.
c) From an ethical egoist perspective, what would be an appropriate course of action for Jeffry? Justify your choice.
d) Would your answer to b) be different if Jeffry pursued ‘utilitarianism’? Justify your position.
e) Advise Jeffry of an appropriate course of action from a deontological ethical perspective. Outline why it is based on deontological ethics.

Expert Answer

a) Jeffry is facing the ethical issues related to the accounting and finance. Ethics in accounting and finance is important in the organisation to ensure investors protection, To be safe from past accounting scams, strong stock market, good public interest.etc. The previous cheif accountant was not folloeing any of the ethical conduct in the oganisation. Hence the new cheif accountant, jeffry has to face all these problems after Richard termination. Jeffry, now has to estabilish certain code of conduct of ethics to cure the situation.

b) Teleogy inethics refers to the ethics which is result oriented. It focuses on the purpose of each action and whether there is an intention for the action.It tells that how much overall pleasure can be derived from the certain actions and how much pain is averted.

Deonetology is based on the man’s absolute duty towards mankind and how it is given priority over results.

c) Following couse of action shall be taken

1.code of conduct- HE should create the ethical environment by creating its own code of conduct. The code of conduct provide guidance to the employees.

2.employees training- The employees should be trained to behave ethically. trianing program should be arranged.

3.Punishment to violators- Strict disciplinary actions shall be taken against the violators.If the unethical behaviour is not punished, then code of conduct and training programmes are useless.

4.Communiaction- Employees should be allowed and encouraged to bring to the notice of management the suspected unethical behaviour, malpractices, wrongful conduct, fraud and violation of the code of conduct.

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