Reference no: EM13834668

1. Damage Expense

Topic: Violations of Internal Control

Characters: Chris, New Distribution Supervisor at a large candy manufacturer Bob, Inventory Control Manager, Chris's immediate boss Chris has been recently hired as the Distribution Supervisor for an international candy company. The plant is in a rural area and is about to begin a major expansion that will triple its capacity. The company has generous benefits and has paid all moving expenses for Chris and his family. During the move, however, the movers damaged a large piece of oak furniture. Chris has contacted the moving company. The insurance is by the pound and would cover only a small part of the worth of the item. Chris has explained this to the moving company, but it refuses to reimburse him for the item's value.

Chris approaches his supervisor, Bob, about the problem. Chris has been on the job about a month and enjoys the partnership they have developed to date. Chris had originally interviewed with Bob, and Bob's recommendation had been a major factor in Chris's getting
the job. Chris has found the types of challenges he was looking for in a new position and is already becoming a major player in planning for the new expansion. Bob tells Chris that he does not think he can do anything to persuade the moving company to reimburse Chris and suggests that Chris pad his next few expense reports to cover the cost. Chris is surprised at Bob's suggestion, because thus far Bob has dealt with him in a very evenhanded manner and has appeared to have strong business ethical standards.

Author: Originally developed by Michael Forget, graduate student at Washington University, as a class project in "Ethical Decision Making." Edited and submitted by Dr. Raymond L. Hilgert, Professor of Management and Industrial Relations, Washington University

2. ZZ Cinema

Topic: Internal Control (Segregation of Duties)

Characters: John, Manager of Theatre Franchise William, Assistant Manager of Theatre Diana, Staff Accountant of Franchise Jodi, Ticket seller and cashier Bob, Doorman

Diana is a college graduate with accounting as her major and is planning to take the CPA exam. She recently accepted the Staff Accountant's position with the ZZ Cinema Franchise. There are 20 theatres that are owned by the Franchise in a widely spread geographic area. John is manager of all the locations of the theatre franchise and William, distantly related to him, is the Assistant Manager working solely at his location. Jodi sells tickets from a glass cage and collects the cash from patrons. At the end of the last show, he adds up the cash receipts, reconciles his sales and hands over unsold tickets and cash to William. Bob, the doorman, collects the tickets from incoming patrons, tears the tickets into two, hands over one to the patron and drops the second half into a little locked box which William picks up at the end of the day. William prepares the bank deposit slip, deposits the cash in the bank, and
keeps the bank receipts and the unsold tickets in the office safe to which he has the only key.

William also prepares the bank reconciliation statements and submits weekly sales reports to Diana. Of late, William has volunteered quite frequently to speed up ticket sales on crowded days by working Jodi's station at the sales counter. John has not objected to this practice. During the past month William has been seen driving a fancy new Lexus to work and seen dining with an attractive blond at the town's expensive restaurants. Diana finds from William's reports that sales have shown no change from previous weeks, even though there appears to be an obvious and significant increase in movie theatre attendance during the summer season. This puzzles Diana, who suspects this apparent discrepancy is being pocketed by William. More puzzling, why hasn't John also noticed this problem? Diana wonders if she should report her suspicions to someone in authority. After all, she has no proof. More importantly, should she go to John? He might be involved in this possible scam. What should she do?

Author: Hema Rao, CPA, DBA, Assistant Professor, School of Business, University of Wisconsin-Parkside

Co-author: Charles Alworth, Assistant Professor of Accounting, Texas A&I University

ETHICS & ACCOUNTABILITY

- Identify and critically evaluate ethical problems based on your understanding of ethical theories and prior research.

- Reflect on your own ethical beliefs

Complete the questions on TWO case studies

1/ What Are the Relevant Facts?

2/ What is the appropriate accounting treatment for this type of issue?

2/ Who Are the Primary Stakeholders and why are these persons/entities Primary Stakeholders?

3/ What Are the Ethical Issues? Include the different perspectives of: utilitarianism, rights and justice

4/ What Are the Possible Alternatives?

5/ What Are the Practical Constraints?

6/ What Actions Should Be Taken?

7/ Which alternatives would you choose and why?

Word Length: 1600 words