University Financial Accounting Case Study: Ethical Analysis

This case study analyzes an ethical dilemma in financial accounting involving Tuscan Choco and Churos Ltd. A customer filed a lawsuit after breaking a tooth, but the CFO chose not to disclose this in financial reports to avoid negative publicity. The analysis critiques this decision, emphasizing the importance of ethical principles such as honesty, transparency, and integrity. It argues that the CFO's actions showed a lack of respect for customers and a failure to uphold commitment to excellence. The case suggests alternative actions, such as informing customers and contacting the quality department to address the issue. The analysis references several academic papers on ethics and organizational behavior, providing a theoretical basis for its arguments. This case study highlights the need for ethical considerations in financial reporting and the potential consequences of prioritizing reputation over transparency and customer relations.

Running head: INTRODUCTION TO FINANCIAL ACCOUNTING
Introduction to Financial Accounting
Name of Student:
Name of University:
Author’s Note:

1INTRODUCTION TO FINANCIAL ACCOUNTING
Part a):
The provided study states that Tuscan Choco and Churos Ltd. is an established
confectionary company which is famous for producing different types of Chocolate bars. The
case states that a lawsuit has been filed by one of the customers of the company who had broken
a tooth at the time of eating one of the chocolate bars which had been produced by the company.
This incident however was not allowed to be disclosed in the financial reports of the company
because the chief financial officer of the company felt that it would be responsible for causing
negative coverage by the media and this had the chance of leading to lawsuits against the
company (Riivari and Lämsä 2014).
The decision of the manager which has been stated needs to be analysed and bettered
from a number of perspectives. There are certain ethical principles which need to be maintained
in all organisations at all costs. The first and foremost ethical principle is that of honesty. The
company officer in fear of damaging the reputation of the company, made a huge mistake as the
ethical principle of honesty was not maintained at any cost. In order to be dependable by the
customers organisations need to be transparent which was not being maintained in the situation
discussed (Huhtala et al. 2013).
Integrity is another genuine attribute which companies need to maintain ideally. The
integrity maintained by a company can make it grow in terms of achievement and development.
Integrity itself is concerned with the ideal that truth needs to be told even if the nature of it is
ugly. In this case if the truth regarding the customer’s complaint would be shared then the
customers had a scope of understanding or even finding out what went wrong. This could have
been done instead of hiding the truth (Riivari et al. 2012).

2INTRODUCTION TO FINANCIAL ACCOUNTING
This case study and the decision by the chief financial officer also showed that the
customers of the company where not adequately respected. This is because, respect would
comprise of informing about the mistake by the company and the complaint by the customer,
stating what actually went wrong. This might have ultimately gone a long way in making the
customers much more reliant and dependable on the company. The company could also have
given a gift hamper of chocolate bars to the customer in order to maintain a good relation and
make sure that one unfortunate incident did not deter him or her from coming to that particular
company in future (Lindebaum, Geddes and Gabriel 2017).
Another noteworthy ethic of a company is concerned with their commitment to
excellence at all times. In this particular case study the financial officer needed to ideally contact
the quality department of the company to ask about the issue in the chocolate bar. A notice could
also have been published by the company for all its customers stating the reasons for mishap and
stating that such issues would not occur in future. It has been reported that in certain cases the
reason to act unethically arises due to client pressure which needs to be neglected at all costs.

3INTRODUCTION TO FINANCIAL ACCOUNTING
References:
Huhtala, M., Kangas, M., Lämsä, A.M. and Feldt, T., 2013. Ethical managers in ethical
organisations? The leadership-culture connection among Finnish managers. Leadership &
Organization Development Journal, 34(3), pp.250-270.
Lindebaum, D., Geddes, D. and Gabriel, Y., 2017. Moral emotions and ethics in organisations:
Introduction to the special issue. Journal of Business Ethics, 141(4), pp.645-656.
Riivari, E. and Lämsä, A.M., 2014. Does it pay to be ethical? Examining the relationship
between organisations’ ethical culture and innovativeness. Journal of Business Ethics, 124(1),
pp.1-17.
Riivari, E., Lämsä, A.M., Kujala, J. and Heiskanen, E., 2012. The ethical culture of organisations
and organisational innovativeness. European Journal of Innovation Management, 15(3), pp.310-
331.