Question

Danny Bern is an accountant for Hot-Chip Company. Early this year Danny made a highly favorable projection of sales and profits over the next 3 years for its hot-selling computer PLEX. As a result of the projections Danny presented to senior management, they decided to expand production in this area. This decision led to dislocations of some plant personnel who were reassigned to one of the company's newer plants in another state. However, no one was fired, and in fact the company expanded its work force slightly Unfortunately Danny rechecked his computations on the projections a few months later and found that he had made an error that would have reduced his projections substantially. Luckily, sales of PLEX have exceeded projections so far, and management is satisfied with its decision. Danny, however, is not sure what to do. Should he confess his honest mistake and jeopardize his possible promotion? He suspect that no one will catch the error because sales of PLEX have exceeded his projections, and it appears that profits will materialize close to his projections. Instructions: a. Who are the stakeholders in this situation? b. Identify the ethical issues involved in this situation. c. What are the possible alternative actions for Danny? What would you do in Danny's position? o Hi e a bus, E wã g

Answer 1

a.) The stakeholders are everyone that works for Hot-Chip such as the share holders, management, employees or lender who lends the money to the company for his projects etc..

b.) The ethical issue involved in this situation is his decision to hide the mistake from everyone that he had made. because, while no one was retrenched form the company, employees had to get moved around to different locations and new people got hired as well. Hiring new people costs the company money and moving employees around might have been an inconvenience for some employees. if in case the results will not be the same as projected then there will be chances that company may suffer huge losses and due to this many of the employees of the company might be retrenched.

C.) The Danny should disclose his mistake he had made in projection to the management with the fact that he did the wrong projection by mistake and not intentionally and as soon as the facts came to his knowledge the the projections are misleading he is informing the management about the same though it might affect his promotions in the future.