The following scenarios are based on real life dilemmas encountered by CIMA members and students. They are designed to help you think about some of the ethical issues that you may encounter in your business.
A CIMA student named CS works as an accountant at a wholesaling company. As the year end approaches the company usually hold several cash warehouse sales to the public. A junior colleague of CS recently revealed that she did not think these sales were being properly accounted for, because she had not seen any invoices raised and the stock was being written off. CS also knows for a fact that the company recently sold a large piece of machinery for cash, and that these transactions did not go through the books.
What should CS do? Should she simply ignore the issue? Or should she perhaps report the company to the tax authority, or resign from her job?
Questions to think about
What are the ethical issues here?
Which principles of the code of ethics are relevant?
What are the threats to these principles?
What are the possible courses of action for CS?
What would be the consequences of each course of action?
What should CS do next? Should she:
a) do nothing – she has mentioned the problem to the FD, who is more senior, so it is out of her hands
b) take further action to ensure the company accounts for the sales?
CS should follow the guidance available in the code of ethics and CIMA’s guidance and try to resolve the issue further. For example, she could escalate it with someone else within the company.
CIMA member CM has been asked to complete an activity based costing with a very short deadline and too few resources. CM thinks that the president of the company is planning on using this information to restructure the company, including making some of his colleagues redundant. CM is worried that his work will not be robust enough to be used for such a big business decision, but the president of the company is putting him under a lot of pressure to complete the work quickly.
Should CM do the work anyway? Or perhaps he should challenge the president, or refuse to do it altogether? If he were to speak to the president, how could he try to persuade her to see CM's point of view?
Questions to think about
What are the ethical issues here?
Which principles of the code of ethics are relevant?
What are the threats to these principles?
What are the possible courses of action for CM and what should he do?
CM arranged a meeting with his line manager, the VP of finance. He explained that he was willing to do the work to the deadline requested, but that if he did this it would not be reliable enough to base the company restructure on. By explaining that basing such far reaching decisions on spurious information risked difficult questions being asked of the company in the future, he persuaded the president to delay the deadline, allowing him to complete the work to a satisfactory standard.
