Reading review problem.Consider the following story:
It was a Saturday afternoon, and the two men at the window table in the club lounge were relaxing over drinks, talking football and a little politics, and cooling down after an hour of tennis. “You’re getting the hang of it,” Fred Smith joked to Jim Cunningham, who, as he often did, had edged out his longtime friend. “Practice, practice, practice,” Jim replied with a laugh. Fred and Jim had been playing tennis together for almost as many years as they had worked at Summitt Manufacturing. Fred is vice president for human resources; Jim is one of the company’s accountants. They try to keep Summitt out of the conversation when they get together, but this particular day they broke their own rule by getting into some shop talk. That’s when Jim dropped a surprise on Fred. “I don’t know if I should tell you this,” he said, “but there’s something going on at work and you should know about it.” Jim then told Fred—in strict confidence—that the company’s chief financial officer was planning to have Summitt take an aggressive stance on sales revenue reporting that, in Jim’s view, would stretch the boundaries of acceptable accounting practices. Jim’s accounting expertise and core responsibilities at Summitt center on the company’s real estate holdings; he doesn’t deal with sales revenue. But he has a pretty good understanding of what’s happening in other areas of the company’s financial activities, and he was clearly concerned with what he had picked up about what the CFO wanted to do. If the CFO were to prevail, his accounting method would burnish Summitt’s earnings outlook and probably help its stock price. “But it could be risky,” Jim told Fred. “It could raise questions” about the firm’s methods and even its integrity. What’s more, Jim said he wasn’t sure the company’s top executives understood the nuances of the CFO’s approach. “They might get talked into going along with something they’re not up to speed on,” Jim said.
Source: Brenda Franklin, “Spinning the Numbers,” HR Magazine,no. 47 (November 2002), pp. 64–69.
a. Is Jim acting professionally? Explain your response.
b. Which of the four schools of ethical thought does Jim follow? Explain your response.
c. Is the CFO’s proposed action ethical?
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