According to Brooks, the ethical culture of a business “should be based on honesty, fairness, compassion, integrity, predictability, and responsibility and focused on the development of trust and the respect for stakeholder Interests” (672). In this case, Mr..
Woodrow, as CEO and Chairman of the Board of Tap Sap Company, did not follow this ethical issue: Firstly, when the Environmental Protection Agency filed a claim against Tap Sap saying that the way they were extracting the sap from the trees to make oil as killing off the endangered Bracken Tall Tree Misbehaver spider, Instead of thinking about interest for stakeholder, he firstly thought for himself that his bonus would be dropped with the stock price.
Secondly, in 2010, he decided to create Grape Age and apply mark-to-market accounting as the advice of Gerald (Tap Sap SCOFF) without concerning legal factor and discussing with other shareholders. Finally, Woodrow cashed out his share of the company by changing fund administrators for the employees 401 (k) plan so that their shares would be frozen for a 90 day period and Woodrow can get the highest value. His action is irresponsible and not fair. The U.
S Securities and Exchange Commission stated that “The auditor generally must be Independent and free from conflicts of Interest for the entire engagement period and the period covered by the financial statements being audited” (1 Woodrow violated this code by arranging for Gerald to be hired by Anderson Arthur and immediately become the lead auditor for Tap Sap because it is obvious that Gerald is not Independent. The revenue of the company directly affects his benefit as he also Is the SCOFF of Tap sap and owner of Grape Ape. En Tap sap received notice from the SEC for investigation into the alleged fraudulent business dealings of Tap Sap for the past two years, Woodrow try to hinder and refuse to cooperate by shredding all of the accounting papers that he had had and convinced AAA to do the same. HIS action violated the SOX Corporate Governance Framework, because the auditors could have access to all accounting and financial papers and report to the board (Brooks, 667). Therefore, Woodrow as the CEO supposed to provide to the audit committee all the documents and supports needed.
However, in my opinion, some other people not only Woodrow are Involved In this “criminal fraud”. The first person Is Gerald Mouse – who consulted Woodrow to use mark-to-market accounting and create a special purpose entity Grape Ape. The use of mark-to-market was concerned to give a false impression of the company and might be illegal. He continued to make a mistake when he became the lead auditor for Tap Sap while he was owner of Grape Ape. Even though Grape Ape is independent from Tap Sap but in fact Grape Ape is a backup plan for Tap Sap’s stock downturn. The second person is Anderson Arthur – Tap Sap’s auditor (member of audit committee).
As an auditor, responsibility of Anderson Is to detect fraud and Inform it to the company but he did not do anything. Moreover, he helped Woodrow to cover the fraud by breaking all the accounting papers to deal with the SEC. He was the one who partly responsible for the failure to FIFO have filed for bankruptcy, the bankruptcy court normally puts an automatic stay on all debt collection, meaning that none of your creditors can foreclose on or repossess your property’. Hence, it might be true that Woodrow would not have to worry about paying fines and loan since he would file for bankruptcy.
However, Woodrow already ended up cashing out $45,000,000 worth of company stock so he cannot file bankrupt when he took a big amount of money from the company. He tried to trick the company and the SEC by keeping the money for himself and push the company into bankrupt. His action is irresponsible and goes against the common morality so it is still considered as “criminal fraud”. Work cited Brooks and Dunn. “Business & Professional Ethics for Directors, Executives & Accountants”. Ohio, 2011. Print Finland. “Options When You Can’t Pay Your Business Debts. ” N. P. , 2012. Web. 8 October 2012 The U.
S Securities and Exchange Commission. “Audit Committees and Auditor Independence”. N. P. , 2012. Web. 8 October 2012 Question 2: The CADRE pointed out that “a stakeholder is any individual or group that has an interest in a decision or proposed action”. Therefore, in the case “Terrorist Payments” I think the stakeholders include: the government, unsanitary organizations (paramilitary squads and the United Peoples Liberation Front), the Cam’s employees and local peasants and workers. The government: the government has power to decide whether your company operates legally or illegally.
CAM has a choice to follow the law that the government declared or to go against it but they would be in big trouble if the government discover their illegal actions. Unsanitary organizations: those organizations are opposed with the government law and also the human moral. If CAM refuse to continue the payment that they call ‘security service’, those organizations will suffer a big loss every year and they probably would react strongly with horrible actions. Cam’s employees and local people: they seem to be the most important stakeholders that Alex and CAM should concern before making decision.
Their safety and live are depend on CAM. If CAM say “yes” to the government new rule without any other solution, their live would be in danger. In contrast, if CAM say “no” to the government, then they might lose their current Jobs someday when the government discovers Cam’s illegal action. Alex and CAM Company are put in a dilemma situation. Ale’s decision can change the whole situation and affects strongly to all of the stakeholders especially Cam’s employees and local people. In a deontological approach, Alex must follow the rightness and fairness to make the best ethical decision (Brooks, 174).
It means that Alex and CAM Company need to follow the government’s rule that they have to stop all the transactions with the unsanitary organizations even though the whole company would be in risk of being killed or economic damages. This Deontological theory brings the conflict between law and morality while only one can be followed (Brooks, 145). Government’s law is what people have to follow but they cannot ignore the facts and consequences. The consequential context, however, considers an act is ethical if “its favorable consequences outweigh its negative consequences” (Brooks, 173).
In this case, Alex should put safety and lives of employees on top. It means, CAM Company should continue to pay for the unsanitary organizations while hiding those payments from the business can run normally. The other consequence could be Cam’s employees would lose their Jobs and Cam’s CEO might be arrested as supporting for terrorist criminal. But because the benefit is over the negative consequence so it is considered morally. Analyzing the “Terrorist Payments” case using Traditional 5-question approach: 1 . Is the decision profitable?
Assume that Alex decides to continue those terrorist payments. This decision doesn’t bring profit to the company and shareholders but it helps company to operate normally (protect company’s personnel and property). It seems to be reasonable decision. 2. Is the decision legal? The answer is definitely “no”. This decision is not legal at all and the company’s CEO can be arrested and charged for terrorist criminal. 3. Is the decision fair? This decision is not fair for the government and Cam’s benefits because they need to pay a huge amount per year. 4.
Is the decision right? This decision is not right. Continue these payments means abet the illicit and criminal actions. Supporting for these paramilitary organizations also means they will have more money to maintain their crime and more people could be killed, murdered and kidnapped. 5. Is the decision going to further sustainable development? It is unsure that whether this decision can create future development or not. Because the unsanitary organizations are criminal so even though you pay for them annually, they can betray and would do not keep the prestige.
Your company may lose everything: money, workers and may be prohibited from business forever. With answer “no” for 4 out of 5 questions, I believe it is not an ethical decision. In my opinion, CAM should inform the government about the threat of terrorist that control over the countryside and Cam’s business activities. The government may have solutions against these organizations then the CAM do not need to pay for this extortion as well as to worry about the safety of personnel and property. Moreover, local people including peasants and worker do not have to live in fear of killing or murdering as before.
This way can destroy the unsanitary organizations thoroughly and bring fairness for everybody. Question 3: Section 302 of the Serbians-Solely Act requires that “principal executive and financial officers certify that they have reviewed the findings of annual or quarterly reports, and find the statements within to be accurate and free of any material errors” (Chronic). According to Brooks, Code of Conduct are created to “provide guidance about the conduct expected to members in order that the services offered will be of acceptable quality and the reputation of the profession will not be sullied” (381).
A public company is required to have a code of conducts to avoid breaching a “fiduciary relationship” and to perform service in a “professional manner” (381). In another word, if a public firm does not have or does not comply tit the Code of Conduct a company has violated the rules of society in some way so the public trust (client’s trust) can be damaged (381). Section 302 of the Serbians- Solely Act requires that “principal executive and financial officers certify that they have reviewed the findings of annual or quarterly reports, and find the statements within to be accurate and free of any material errors” (Chronic).
Code of Conduct include: Corporate Responsibility in Financial Reporting, Conflicts of Interest, Code of Protections (Chronic). In real life there is not always black and white, sometime ethical decision is not the best decision. Stephen stated that “It is easier to be ethical when you’re well off and declaring profits than when you’ve got water up to here and you may have a chance to save yourself”. Some codes do not need to be in detailed (Chronic). For example, using company printer for private purpose is considered not ethical but it is not a big deal and no one care about that.
According to Chronic, in some case Codes of Conduct may create a chance for unethical behavior. “Codes of conduct that limit employees’ ability to speak out against the corporation can keep them quiet for fear of Job loss or legal retribution even if the company is engaging in n unethical practice” (Chronic). In order to create a corporate code of ethics, companies should consult with a legal firm or expert to ensure their code of conduct meets standard business guidelines (Chronic).
The Code of Conduct should also be understandable and fair for everyone. In other words, all member of the company from the CEO to staffs need to comply with the Conduct and the discipline and punishment will be applied for any person who not follow the conduct. In addition, small unethical action such as: bring company pen home or using copier and printer for private purpose should not be detailed for punishment.
