Ethical Dilemma Accounting Department of a NPO

Question: Discuss about theEthical Dilemma for Accounting Department of a NPO. Answer: Introduction In the sector of social service, a non- profit organization is working for the community. The company is doing well. However, they need some permission or license from the government for which they are trying since last few years. This information comes from the sources that tell about the conversation between senior accountant and general manager of the company. In this situation, there was an ethical dilemma for that senior accountant. The reason being, in past years, company has shown manipulations in its accounts to take many permissions and grants from the government. Whenever they had to take some grant from authorities, they show the accounts of a prosperous year instead of the current year. They have been successful in this since so long. So, this time also they want this new senior accountant to follow the same practice as the previous accountant did. In fact, the general manager has strongly proposed to do so. And if he does not follow the instructions, then his responsibil ity will be given to some other employee along with his incentives and bonuses. The general manager warned him not to discuss this with anyone outside the meeting room. This was very disturbing for the accountant because he was not able to choose what would be right for him. He is concerned about the poor financial practices prevailing in the organization. Ethical Dilemma The accountant faces a dilemma in which either he has to compromise with his job or he has to concede with his ethical values. If he chooses to agree with what general manager said, he has to prepare a false report. This will be against his values and may have ethical implications on his career. On the other side, if he chooses to refuse the instructions of general manager, he will have to face financial consequences. He has a family of four children and he is the only bread winner of this family. He will not only lose incentives, but may also have disciplinary actions against his job. So, he is in a difficult situation and is not able to choose the right path to move on (Stanga Turpen, 1991). Ethical Questions in the Situation Is this Behaviour Acceptable on the Part of a Non- Profit Organization? The underlying case study is of an organization which is an NPO and works for welfare and betterment of the society. Such organization is expected to follow a certain code of conduct which is full of moral and ethical values. Government gives them permissions for certain events and even allot funds to them having trust that they will work for the poor and needy. Society trusts on these organizations and donate handsome amount to them to work for the social welfare. In return, these organizations have so many malpractices internally and deceive the entire community. The question arises that as a responsible population, should we accept such behaviour of so- called NPOs? (Austin Seitanidi, 2012) To What Extent Such Humiliation of an Employee is Justified on Ethical Grounds? An employee who is simply an accountant in a not- for- profit organization is being humiliated and put into an ethical dilemma which laid him in serious distress. The employee is the only income source of a family which comprises of 4 children. He has no option to leave his job and even the incentives or bonuses, reason being he needs money to bear the expenses of his family. So, he is compelled to compromise with his moral values. He has to prepare a false report showing sound financial position of the organization. This dilemma has put him into confusion because he is going to face adverse consequences in either situation. The ethical concern here is to what extent it is justifiable to humiliate an honest employee in such manner (Mc Devitt Van Hise, 2002). Is Window Dressing Acceptable Under Ethical Code of Conduct? Another concern is window dressing. It refers to changing or manipulating financial accounts in a manner that they seem attractive and shows a strong position of the organization. Companies often use this practice before they finally present their accounts to stakeholders. They purposely manipulate some figures of revenues, taxes and profits to show that they have sound liquidity and profitability. Sometimes they show losses so that they can avoid tax payments. This NPO under study is using this practice to take a grant from the government. Is this an ethical code of conduct? A big question of concern! (Kellogg Kellogg, 1991). Lessons Learnt from this Dilemma Firstly, I learnt that no matter how much righteous an organization behave in a society, it doesnt prove that it can make no mistakes. A critical analysis is always required to assess the ethical conduct of any organization and to avoid ethical dilemma as faced by the senior accountant of this organization. If one is honest and ethical, then he/ she need to find an ethically performing organization to be a part of. Besides that, even if one is already working in an organization and comes across such a situation as we have in underlying case study, then he has to decide very smartly. He must work in a manner which is not offensive for the organization and it should also not hurt ethical sentiments of yours. Lastly, I have learnt about the flaws of regulatory systems. This organization is using window dressing since so many years, yet not detected to be faulty. This is a serious issue of concern. Conclusion The above case study clearly defines an ethical dilemma for an honest employee. Firstly, this shows that there is no place for honesty and sincerity in a corrupt workplace. Secondly, this case study also shows dampened ethics and moral values of organizations, and surprisingly it is a non- profit organization. It is meant for public welfare but instead of that it is indulged in window dressing and other malpractices. This is really disgraceful and a pathetic situation not only for the organization, but also on the part of government authorities. They are known of the facts but still they did not take any action. This is a question on ethics of a workplace. Recommendations There is a recommendation for the accountant to face the situation and for others who have experienced the similar dilemma in their workplace. The following steps will give them an insight on how to react in such scenario. First of all, they must find out all the facts about the situation. Discern all the ethical issues affecting stakeholders. Try to determine the alternative courses of action. Identify the pros and cons of the situation (Finegan, The impact of personal values on judgments of ethical behaviour in the workplace, 1994). Take final decision that must be compatible with the code of conduct given by International ethics standard board of accountants (IESBA) (ICAEW, 2011). References Austin, J.E. Seitanidi, M.M., 2012. Collaborative value creation: A review of partnering between nonprofits and businesses: Part I. Value Creation Spectrum and Collaboration Stages. Nonprofit and Voluntary Sector Quarterly, pp.726-58. Finegan, J., 1994. The impact of personal values on judgments of ethical behaviour in the workplace. Journal of business ethics, 13(9), pp.747-55. ICAEW, 2011. Code of Ethics C. [Online] Available at: https://www.icaew.com/en/membership/regulations-standards-and-guidance/ethics/code-of-ethics-c [Accessed 24 August 2016]. Kellogg, I. Kellogg, L.B., 1991. Fraud, window dressing, and negligence in financial statements. Shephard's Commercial Law Series. Mc Devitt, R. Van Hise, J., 2002. Influences in Ethical Dilemmas of Increasing Intensity. Journal of Business Ethics, 40(3), pp.261-74. Stanga, K.G. Turpen, R.A., 1991. Ethical judgments on selected accounting issues: An empirical study. Journal of Business Ethics, 10(10), pp.739-47.