Question

Recently, you have been hired to manage all of the accounting duties for a local hardware store. This is your first job since graduating. The Harper Hardware Store is a local family-owned business that has operated for more than three decades; it is a staple of the community. The organizational policies are “understood”, but often ignored. It is not uncommon for staff to extend credit to friends without conducting a credit check. Thus, the outstanding receivables balance continues to grow. You have also noticed that one of the employees (a family member) has been pilfering cash. A thorough analysis of the company’s financial performance over the last five years shows that key financial ratios have been trending downward, consistently.

What ethical dilemma does the accountant face?

What business problem(s) does the company have?

Who are the potential stakeholders and how might they be affected by the decision of the accountant?

What choices does the accountant have? Evaluate the choices, i.e. who benefits or who is hurt by the choice(s).

What action would you recommend, i.e. how do you believe the business problem should be resolved? How should the ethical dilemma be resolved?

Going forward, what should the company do regarding organizational ethics?

Answer 1

Answer :

The company has problems in the form of uncollected account receivables that leads to bad debts

the company has to put a strict policy to the staff who are providing loans to the friends without a credit check. if staff violate the policy should impose fines on them.

If outstanding account receivables decrease or increase potential stakeholders are affected, those are lenders, directors,

government, creditors, directors, shareholders, employees.

by the decision of strict policies that leads to a decrease in the outstanding accounts receivables, in effect to that financial ratios will trend to upward.

To communicate organizational ethics is by training staff on company standards. should explain what is affects if you provide loans without a credit check.

Key for business staff ensuring that all employees should understand ethics.

who is pilfered cash have to get him brought to the notice of the management, and should ensure that these type of activities should not repeat again.

By doing so business problems definitely resolve.