Ethical Issues in Financial Professionals

ETHICS FOR FINANCIAL
PROFESSIONALS

ETHICAL ISSUES IN THE CASE
One of the important aspects of the AAA Ethical Decision Making Model is the
establishment of the facts and the identification of the ethical issues (Overall, 2016).
Following ethical issues have been identified in the chosen case study of role of Avneet in
Shady Oaks. The revenue structure of the organisation has some ethical concerns in context
of the service fee being charged in the independent living units at 200 percent of the purchase
price of the medicines and costs of employment of the staff. It is wide evident that in order to
sustain the organisation as a whole, the burden of the higher revenues has been rendered on
the cost structure of independent living units.
The yet another ethical issues in the case study is that a hike has been proposed in the salary
of Jane and Avneet instead of utilising the same amount for the stabilisation of the
employment costs, which were high due to rising demands as opposed to supply. Further, in
order to balance the employee costs, it has been proposed by the entity to terminate two of the
long associated employees of the enterprise.
In addition to the issues in context of the employees and the revenues, the yet another issue is
in the maintenance cost in the air conditioning system. It has been stated in the case study that
as suggested by specialists the three yearly checks has been recommended for the asbestos. In
addition, it is known that the cost of maintenance increases due to the inflation in the market.
The entity under the leadership of Jane is not willing to recognise the maintenance expenses
in the financial statements due to the potential pressures on expenses and liabilities.
In terms of the accounting policy applications, while some policies are out of date and Jane
has suggested not to recognise the differentiation between the current and the fixed assets.
There have been additional issues with leases and long term loans. Lastly, to state the relative
of Jane is the auditor of the Shady Oaks highlighting the ethical issues of independence in the
entity.
ETHICAL BOUNDARIES IN THE CASE
The yet another step of a sound decision making as per the AAA Ethical Decision Making
Model is the recognition of norms and principles affected. The following segment is
descriptive of the ethical boundaries in the given case scenario. The stakeholders that have
been affected due to the various ethical issues are listed as follows. Firstly, as the
organisation is not able to stabilise the cost structure, the burden of the same is on the rates of

the independent units. For instance, it has been found on the review of the case scenario that
change in the accounting method of revenues has not been accounted for at the start of the
financial year and the rates of the independent units have not been finalised in order to set off
the losses of fully supported operations. Thus, instead of controlling the costs of the
operations, there can be potential increments in the rates of the independent units apart from
the high service fees structures comprised therein.
The yet another group that has been majorly affected in the scenario is that of the employees
of the enterprise. As mentioned earlier, the two employees are being sacked off in order to
bring down the employment costs. Further it has been evident that the employees are not
provided any motivation or rewards for the services, as against the increments in
remuneration of senior staff.
Further to state, the safety of the customers or the patients in the case is a key consideration
in a business (Kidwell, Fisher, Braun and Swanson, 2013). The failure to conduct of the
review of the air conditioning systems is critical as potential safety concerns can emerge. In
addition the interests of bankers have and regulators have been undermined. The organisation
has failed to re value the building of which the cost is estimated to be $ 3 million which has
been mortgaged and improper financial reporting issues have also been highlighted on
account of old accounting policies and incorrect lease accounting treatments.
The absence of the independence of the auditors of the enterprise is a matter of concern for
the organisation as a whole as that stops the enterprise Shady Oaks from fairly reporting the
real financial picture of the enterprise in interests of wide range of associated stakeholders.
ALTERNATIVE COURSES OF ACTION AND THE CONSEQUENCES OF EACH
POSSIBLE COURSE OF ACTION
In addition to the above evaluation, it is imperative to identify the alternative courses of
actions to address a moral problem along with the possible consequences therein.
In context of the revenues, it has been known that the entity has recently switched over to the
need based approach, which is in more line with the organisational objectives. However, it is
evident that the enterprise would put the pressure of losses of the fully supported operations
on the rates of the independent living units. This will be stabilised by the increasing the prices
of the independent living units even more. If the said action is adopted, instead of balancing
the costs of the operations, the entity will not be able to retain its customers in future. In