Reference no: EM132950413

SurfSide Suites operates a regional hotel chain. Each hotel is operated by a manager and an assistant manager/controller. Many of the staff who run the front desk, clean the rooms, and prepare the breakfast buffet work part time or have a second job, so employee turnover is high.

• Assistant Manager/Controller Briana Ahmed asked the new bookkeeper to help prepare the hotel's master budget. The master budget is prepared once a year and is submitted to company headquarters for approval. Once approved, the master budget is used to evaluate the hotel's performance. These performance evaluations affect hotel managers' bonuses, and they also affect company decisions on which hotels deserve extra funds for capital improvements.

• When the budget was almost complete, Ahmed asked the bookkeeper to increase amounts budgeted for labor and supplies by 15%. When asked why, Ahmed responded that hotel manager Sadie Rankin told her to do this when she began working at the hotel. Rankin explained that this budgetary cushion gave her flexibility in running the hotel. For example, because company headquarters tightly controls capital improvement funds, Rankin can use the extra money budgeted for labor and supplies to replace broken televisions or pay "bonuses" to keep valued employees. Ahmed initially accepted this explanation because she had observed similar behavior at the hotel where she worked previously.

Requirements

Problem a: Put yourself in Ahmed's position. In deciding how to deal with the situation, answer the following questions:

1. What is the ethical issue?

2. What are the options?

3. What are the possible consequences?

4. What should you do?