Decision making and Problem Solving Report 2022

Running head: DECISION MAKING AND PROBLEM SOLVING
DECISION MAKING AND PROBLEM SOLVING
Name of the Student
Name of the University
Author Note

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Executive Summary
The main purpose of this report will be to discuss about the management dilemma of
Commonwealth Bank of Australia. This paper will lay stress on principles of decision making
and problem solving within the organization. The management dilemma will include the
recent money-laundering case that the bank faced and how the regulators of the bank need to
fix it by the management of the bank only. The views and perceptions of the mangers will
also be discussed in this research paper.

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Table of Contents
DECISION MAKING AND PROBLEM SOLVING............................................................0
Introduction................................................................................................................................3
About the Organization..............................................................................................................3
Identified Issue...........................................................................................................................4
Research Question......................................................................................................................4
Research Program......................................................................................................................4
Sources.......................................................................................................................................5
Analysis of the Findings.............................................................................................................5
Ethical Dilemmas...................................................................................................................5
Anti-Money Laundering Case................................................................................................6
Alternatives................................................................................................................................7
Recommendations......................................................................................................................8
The Role of Managers during Decision Making....................................................................9
References................................................................................................................................10

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Introduction
The chief objective of this report will be to discuss about the management dilemma of
Commonwealth Bank of Australia. This paper will lay stress on laws of problem solving and
decision making within the organization. The management dilemma will include the recent
money-laundering case which the bank faced and how the managers of the bank need to fix it
by the management of the bank only. The views and perceptions of the mangers will also be
discussed in this research paper.
About the Organization
One of the top leading banks of Australia, The Commonwealth Bank, is a bank that
provides several financial businesses such as funds management, retail, insurance, prime
business, investment, organizational banking and many other services. CBA was established
under the Commonwealth Bank Act of 1911 and started operating in the year 1912. They
were sufficient enough to conduct savings as well as general banking business. In the present
time they have grown into a business including 800,000 shareholders and 52,000 workers
working with the Commonwealth group. The organization has an executive management
team who assures a profitable development of the business and constantly encourages and
support the workers. Within the core of the business activities, integrated work and highest
standards of profession are ensured by their strong corporate governance body. Problem
solving and decision making is a major part included in their code of conduct. The
Commonwealth Bank covers the financial needs around the globe with its branches spread
across different locations such as New Zealand, Europe, Asia and North America. In order to
meet their goal of being the most accessible bank of Australia, they have developed extensive
policies and initiatives (Commbank.com.au 2019).

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Identified Issue
The problem of management in the organization of Commonwealth Bank of Australia
which has been identified to discuss in this paper is the ethical issues in accounting. There are
several examples like anti-money laundering case and additional examples subjected to
financial management of the organization, which has impacted the brand image of the
organization (Choo 2014).
Research Question
The research questions which will address the management problem or decision
making process within the system are as follows:
1. What are the ethical dilemmas that the leaders of the management of the
organization have faced in dealing with the financial assets of the organization?
2. What are the causes and details of the anti-money laundering case that occurred
within Commonwealth Bank of Australia?
3. What are the after effects related to ethical issues that is experienced by the
organization of Commonwealth Bank of Australia?
Research Program
The research program will involve the survey which will be held among the
customers who have suffered or suffering due to the unethical practices that has been done by
the financial planners of the organization. Survey will also involve thorough researches with
involving all the details of the cases along with details of the accounts of the customers, who
are the worst sufferers of these anti-money laundering cases of Commonwealth Bank of
Australia.

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Sources
The resources in this research program will involve only the secondary data, which
will involve different case studies, case histories, newspaper articles relate to the unethical
practices of management of the company of Commonwealth Bank of Australia in the field of
dealing with different kinds of financial items of the customers. Various records will be taken
from the government departments of Australia along with other organizational records and
databases of the customers who complained about the unethical practices they have suffered
while dealing with their accounts by the commercial planners of the Commonwealth Bank of
Australia. Though it might seem that there may be some regarding the authenticity issue with
the data that will be gathered from different sources and collections, the research need to be
carried with these sources only, as no data from primary sources will be entertained.
Analysis of the Findings
Ethical Dilemmas
It has been widely known that the organization is widely known for its anti-money
laundering cases and other ethical dilemmas related to financial part of the business of the
Commonwealth Bank of Australia. There are ethical dilemmas in the leadership as well as
decision making within the organization and its processes (Abubakar et al 2017). It has been
seen in the researches that and studies that there are the financial planners of the organization
who acted unethically while dealing with various kinds of financial products of the
customers, like savings of the retired elderly persons and their documents. There is also lack
of disclosure regarding the financial risks of dealing with the products. Apart from those, one
of the financial planners was involved in forgery of documents of the customers as well as of
the banks itself (Fu, Carson and Simnett 2015). It has been also found that the
Commonwealth Bank’s management encouraged the unethical behavior regarding paying

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bonuses, commission and overseas sales trip which involved the top financial performers who
are able to meet their individual sales targets. The leaders of Commonwealth Bank of
Australia encouraged all these unethical practices rather than stopping them and in
minimizing the damage. The anti-money laundering case of Commonwealth Bank of
Australia shook the entire world and marked a black spot in the financial industry of the
region of Australia and other areas were the bank operates their business (Todorović 2018).
Anti-Money Laundering Case
The Commonwealth Bank has experienced half-yearly benefits breakdown when it
was compelled to set aside a sum of 375 million dollars as penalty for being accused for
money laundering and financing of terrorism (Berhe 2014). The company was prosecuted for
53,700 gaps of Anti-Money Laundering and Counter-Terrorism Financing Act 2006 by
Austrac, a financial intelligence agency of Australia. The agency alleged that the bank
permitted the usage of its modern deposit machines for money-laundering associations, where
some of the machines had linkage with drug allocation and importation networks. In addition
to $375million, the bank had set aside a sum of $200 million for covering the legal costs
(George and Kavakli 2013). However, according to a lawful expert, the fine was belittled by
CBA which it was supposed to pay. The Senate had also permitted a bill for increasing the
governance of the sector. The BEAR or banking executive accountability regime had asked
the banks to adopt honesty and sincerity by themselves. At the same time, directors and
senior officers were imposed with obligations regarding remunerations. A Productivity
Commission report stated that the top banks of Australia were given permission to exploit
faithful consumers and a maintained public flogging was faced by the sector. The company
executives promised to make a great deal of effort for fixing their mistakes and remained
positive about the economic prospects of Australia (Singh and Best 2019).

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The After Effects of the Management/Ethical Issues of CBA
The bank’s reputation of being well run and having a good model of governance was
stripped away when a report was published related to the accountability, governance and
culture of the bank. The responsibility for fixing up was turned to CBA itself as more could
have been done like removing some of the executive officers and board members and
involving placing conditions on the banking license (Chaikin 2018). The Australian
Prudential Regulation Authority (APRA) also made an agreement with CBA where the bank
accepts as well as promises to develop a plan to fulfill the recommendations given by the
report. APRA also supplemented $1 billion to the minimum capital demand of the bank for
ensuring a stable banking system (Schlagwein, Thorogood and Willcocks 2014). It was
mentioned in the report of APRA that further investigations will be continued regarding the
conduct of the employees of CBA. The bank was asked to submit the remedial plan of action
which should contain clear and measurable sets of replies and one timetable for each of the
responses. A person was also supposed to be nominated for taking the responsibility of the
action plan from the executive team of CBA. The bank was asked to appoint an individual
approved by APRA who will be an independent reviewer about the completion and
enforceable undertaking of the items in the action plan. The report of APRA also mentioned
that the problems related to CBA was not based on a single issue, rather it affected almost
45,000 employees of the entire organization with assets worth $967 billion. But the report
was solely made to APRA and not disclosed to the general public (Sidhu and Tan 2011).
Alternatives
The major problem which can be identified after performing the research and analysis
of the findings is the issue in leadership (Asrar-ul-Haq and Anwar 2018). It has been found in
various researches and studies and has been unanimously agreed that leadership is one of the

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vital issues in the settings of an organization, and possess a huge impact on the performances
and behaviors of the employees of an organization. Multinational business houses like
Commonwealth Bank of Australia spend huge bucks on leadership development programs
(Young 2013). But when the leaders starts to behave unethically with the system of the
organizational culture and on the operations of different departments, the workflow of the
organization starts unethical practices increase within the system of the organization. It
hampers the work culture after a certain period of time, and when t gets public, the brand
image or the brand value of the organization deteriorates in the market places where that
organization operates their business. So, it can be suggested that leadership was one of the
major issue found within the management of the organizational structure. Proper leadership
would have stopped the unethical practices of the management of the organization and have
benefitted the customers of the areas where they are serving them. Good impacts of social
media can be used as an effective tool to handle all these situations (Hussain 2017).
Recommendations
An enforceable undertaking could have saved the regulator on cost, time and
uncertainty of adopting a legal action and also helped them to figure out certain remedial
actions appropriate to the circumstances. But the enforceable undertaking of the bank was
very poor and had a little tailoring. The regulatory touch of CBA was almost missing.
Moreover, APRA could have used the power of the Banking Act and could have placed
emergency and immediate restrictions on the business practices of the bank along with the
size and measure of executive compensation. One of the most important findings of the report
of AFRA was that enough incentives were not provided to the senior officers by the CBA’s
compensation schemes which could have accounted for the risk involved in their decision-

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making process. APRA also had the power to remove any senior officer or manager or even
bank director if they did not fit the propriety criteria (Gregory et al 2013).
Strict rules regarding the leadership policies need to be implemented, so that if any
unethical practices seems to occur within the workplace, necessary actions can be taken with
the person or people involved with the issue, which will help to safeguard the accounts of the
customers, and strong relationship between the customers and the management of the
Commonwealth Bank of Australia can be maintained, which will, in turn, help to maintain
the competitive advantage over the rival institutions in the places where the bank operates
(Toohey 2014).
The Role of Managers during Decision Making
The financial manager of a company should have the proper capability and be trained
to handle the key decisions regarding financial management. The chief aspects of the
procedure of financial decision-making include investments, financial dividends and
management of assets (Bajada 2017). The decision-making process should be under the
control of the manager as it is a very sensitive aspect for analyzing the internal and external
variables affecting the natural development and growth of the organizational activities. The
optimal size of the financial company must be defined by the financial manager (Weber et al
2018). He should have done a clear market study to understand the financing methods,
demands, human resources and technology that are available. A financial strategy must be
developed by the manager in order to continue the business for a long period of time. He
must examine the sources that can provide the best credit to the company and suggest the best
possible financing options. Regarding the dividend policy, a financial manger plays a vital
role. It involves how much income will be paid to the shareholders (Al-Tarawneh 2012). A
manager in this case should aptly divide the company’s earnings among the shareholders for

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improving the operations. A financial manger must stipulate and prioritize the current assets
available in the company in the most effective way possible (Tarka 2018).

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References
Abubakar, A.M., Elrehail, H., Alatailat, M.A. and Elçi, A., 2017. Knowledge management,
decision-making style and organizational performance. Journal of Innovation & Knowledge.
Al-Tarawneh, H.A., 2012. The main factors beyond decision making. Journal of
Management Research, 4(1), pp.1-23.
Asrar-ul-Haq, M. and Anwar, S., 2018. The many faces of leadership: proposing research
agenda through a review of literature. Future Business Journal, 4(2), pp.179-188.
Bajada, C., 2017. Money laundering activities in Australia—an examination of the push and
pull factors driving money flows. In The Changing Face of Corruption in the Asia
Pacific (pp. 127-147). Elsevier.
Berhe, T.H., 2014. Conflict between anti-money laundering and anti-terrorism finance laws
requirements and bank secrecy and confidentiality laws (Doctoral dissertation, Institute of
Advanced Legal Studies).
Chaikin, D., 2018. A Critical Analysis of the Effectiveness of Anti-Money Laundering
Measures with Reference to Australia. In The Palgrave Handbook of Criminal and Terrorism
Financing Law (pp. 293-316). Palgrave Macmillan, Cham.
Choo, K.K.R., 2014. Designated non-financial businesses and professionals: A review and
analysis of recent financial action task force on money laundering mutual evaluation
reports. Security Journal, 27(1), pp.1-26.
Commbank.com.au. (2019). Personal banking including accounts, credit cards and home
loans - CommBank. [online] Available at: https://www.commbank.com.au/ [Accessed 28
Sep. 2019].

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Fu, Y., Carson, E. and Simnett, R., 2015. Transparency report disclosure by Australian audit
firms and opportunities for research. Managerial Auditing Journal, 30(8/9), pp.870-910.
George, I. and Kavakli, M., 2013. Data mining in the investigation of money laundering and
terrorist financing. In Data Mining: Concepts, Methodologies, Tools, and Applications (pp.
2193-2207). IGI Global.
Gregory, A., Milner, S., Windebank, J. and O'Brien, M., 2013. Fitting fathers into work‐
family policies: international challenges in turbulent times. International Journal of
Sociology and Social Policy.
Hussain, S., Ryan, M., Cripps, H. and Lambert, C., 2017. Role of social media in handling a
crisis situation: A case study of Commonwealth Bank of Australia (CBA). In The
proceedings of 2nd Business Doctoral and Emerging Scholars Conference (p. 98).
Schlagwein, D., Thorogood, A. and Willcocks, L.P., 2014. How Commonwealth Bank of
Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS
Quarterly Executive, 13(4).
Sidhu, B. and Tan, H.C., 2011. The performance of equity analysts during the global
financial crisis. Australian Accounting Review, 21(1), pp.32-43.
Singh, K. and Best, P., 2019. Anti-Money Laundering: Using data visualization to identify
suspicious activity. International Journal of Accounting Information Systems, 34, p.100418.
Tarka, P., 2018. The views and perceptions of managers on the role of marketing research in
decision making. International Journal of Market Research, 60(1), pp.67-87.
Todorović, Z., 2018. Application of Ethics in the Accounting Profession with an Overview of
the Banking Sector. Journal of Central Banking Theory and Practice, 7(3), pp.139-158.

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Toohey, B., 2014. Closing the gap: the case for a Commonwealth Anti-Corruption and
Misconduct Commission. Australasian Parliamentary Review, 29(1), p.38.
Weber, M., Chen, J., Suzumura, T., Pareja, A., Ma, T., Kanezashi, H., Kaler, T., Leiserson,
C.E. and Schardl, T.B., 2018. Scalable Graph Learning for Anti-Money Laundering: A First
Look. arXiv preprint arXiv:1812.00076.
Young, M.A., 2013. The exploitation of offshore financial centres: Banking confidentiality
and money laundering. Journal of Money Laundering Control, 16(3), pp.198-208.