ACC5216 Assignment: Analyzing Barclays Case Using Accounting Theories

This essay examines the Barclays case, focusing on the actions of the CEO in response to a whistleblower. The assignment applies three key accounting theories: going concern, conflict of interest, and stakeholder theory, to analyze the CEO's behavior and its implications. The going concern principle is used to assess the long-term sustainability of the company, while the conflict of interest theory addresses the ethical issues arising from the CEO's personal relationships. The stakeholder theory evaluates the impact of the CEO's actions on various stakeholders. The essay compares and contrasts these theories, highlighting the importance of ethical conduct and the protection of whistleblowers within financial institutions. The analysis underscores the need for accountability and the application of codes of ethics to prevent misconduct, ultimately emphasizing the significance of ethical leadership and responsible corporate governance. The conclusion stresses the duty of the board and CEO to avoid conflicts of interest and to disclose pecuniary interests to protect the company's interests, along with the need for strong enforcement of ethical codes.

Running head: Accounting Theory
Accounting Theory

Accounting Theory 1
Abstract
A whistleblower is an individual who exposes any information which is deemed to be unlawful,
unethical and incorrect in the public or private organizations. The information can be categorized
in many ways such as violation of law, regulations or policies and laws of the company. It can be
a threat to interest of the public or national security or fraud and corruption. Those people who
choose to be whistleblowers can expose the information in externally and internally.
So, in this assignment, the various accounting theories would be applied on the case study of
Barclays which would be applied on the behavior of CEO of the company and whistleblower.
The three accounting theories would be compared and contrasted at the end of the essay.

Accounting Theory 2
“Application of accounting theories on the case of Barclays”
Who is a whistleblower?
A whistleblower can be an employee of the company or of the agency of government who
reveals the information to the public or higher authorities about the wrongdoings which can be in
the form of corruption or fraud. He comes forward to share his knowledge about any wrongdoing
taking place in some department or in the whole organization. He could be an employee,
supplier or contractor who is aware of some unlawful activity taking place. There are two types
of whistleblowers viz. internal and external. Internal whistleblowers report the wrongdoings to
the senior officials such as Head HR or CEO while the external whistleblower can expose the
company outside like the media, police or officials of government (Nielsen, 2013).
Parker has also highlighted the relationship between academic accounting research and
professional practices which can greatly impact the engagement of accounting theories and the
society (Parker, Guthrie and Linacre, 2011)
This essay describes the case of CEO of Barclays who was trying to expose the whistleblower
along explaining three accounting theories revealing the various aspects of whistleblowing.
These will also be compared and contrasted with discussing the relationship between accounting
research and professional practice.
Identifying the facts of the case and discussing the reason why Barclays CEO was trying to
expose whistleblower

Accounting Theory 3
As per Morris and Glover (2018), the CEO of Barclays Mr. Jes Staley was fined $1.1 million for
his attempt to expose a whistleblower in his company. He has breached the standard of care and
risked the confidence in the procedures of whistleblowing of the company. Whistleblowers play
a crucial role in revealing the practices of poor governance and misconduct in the sector of fiscal
services. The imposed fine is the third biggest fine ever enforced on any person by the Financial
Conduct Authority (FCA).
The fine is about 15% of the compensation given to him in 2016. As per Prudential Regulation
Authority and FCA, the whistleblowing systems of Barclays would be in surveillance of strict
monitoring and scrutiny. The case requires the officials to be accountable for their misconduct. It
is the failure of CEO to safeguard the interests of whistleblowers of his company.
The controversy was initiated in 2016 when the board received a letter which raised concerns
about the recruitment of one of the colleagues of Staley Mr. Tim Main in JP Morgan. The
contact revealed the matter of personal interest of both the persons and their role in dealing with
those issues at JP Morgan. After knowing that the matter has been exposed by some
whistleblower, Staley tried to track his identity.
Description of an accounting theory which may help to explain the CEO’s conduct leading to
the whistleblowing
According to the opinion of Fabrizio (2016), the going concern principle of accounting pertains
to the assumption that an organization will continue to operate the business in the long run. It
implies that it would not be forced to halt its operations and liquidate its assets at low prices. In
this case, the entity shall be assumed to continue its operations and utilizing its assets in the most
efficient manner.

Accounting Theory 4
With reference to the given case, the CEO should carry out his responsibilities and duties in an
honest and ethical manner. The officials, board and CEO should ethically manage the affairs of
the company so that it can able to sustain in the long run. They should handle the apparent
conflicts of interest between personal and professional relationships.
The CEO was accused of involving personally with his friend and colleague Tim Main when
they were together in JP Morgan Chase and again when the latter was hired at Barclays. He even
tried to identify the whistleblower who had launched a complaint against him and his colleague
through ordering the security team of the bank to track him. So, it would affect the going concern
of the company as the CEO was involved in uneconomical long-term commitments to which the
company was subjected (Binham, Arnold and Martin, 2018).
A second accounting theory to explain how it can be applied to whistleblowing
Another accounting theory which is relevant to the case is a conflict of interest. The CEO and
board should carry out their responsibilities and duties in an honest and ethical manner. They
should avoid those activities which would lead to rising of conflict of interests in the company.
They must identify and raise issues before they may result in conflicts.
A conflict of interest occurs when the personal interests of the individual are contrary to the
interest of the company. In case of an unanticipated rise in the conflict of interest the chief risk
and compliance official and general counsel must take proper steps to eliminate the conflict or to
mitigate its impact. Conflict of interest may arise in situations where the officials or CEO may
have direct personal interest, with an individual with whom they have a close relationship as in
the given case or an indirect interest in a corporation or partnership etc (Brower and Mahajan,
2013).

Accounting Theory 5
In the given case the CEO of Barclays had a direct interest in the company with an individual
who had a close relationship with him. So upon identifying this matter, the whistleblower had
reported the incident to the board. Upon this, Mr. Staley ordered the security team of the bank to
track the identity of the whistleblower and tried to expose him. This is in contrary to the theory
of conflict of interest which suggests that the chief risk and compliance officials and the other
responsible members of the committee should resolve and eliminate the probable conflict of
interests in a way which suits to the circumstances in the best manner.
Using a third accounting theory, explain the regulator’s quest to make the CEO accountable
The third applicable theory is the stakeholder’s theory. It focuses on the impact of corporate
activity on all the stakeholders of the company. It states that the officials and board should
consider the interests of each of the stakeholders in its administrative procedures. It comprises of
attempts to reduce or eliminate the conflicts between the interest of the stakeholders.
The stakeholders include traditional members of the corporation like officers shareholders and
officers . The interest of the third party who have some degree of dependency upon the company
would also be addressed in this category. It basically addresses the principle of who or what
really matters. With respect to the traditional view of the company i.e. the investor's view, the
owners and shareholders play a significant role in the company and it has a fiduciary
responsibility to put their needs on a priority basis. It should increase its value for them (CNBC,
2018).
With reference to the given case, the officials such as CEO should consider the impact of their
activities on the stakeholders of the company. The CEO was alleged to be personally interested
in some contract along with his friend and colleague which would pose a threat to the long-term

Accounting Theory 6
sustainability of the company along with being hazardous to the interest of the various
stakeholders. His acts were exposed by the whistleblower and he tried to expose him which was
unethical.
Compare, contrast and critically evaluate the chosen theories
Particulars Going Concern
Theory
Conflict of interest
theory
Stakeholder’s theory
Compare The theory of going
concern assumes that
the entity will
continue to operate in
the future.
A conflict of interest
arises when the best
interests of an
individual are not
aligned with that of
the organization.
As per Baumfield
(2016), the
stakeholder theory
suggests that the
activities of the
company should be
conducted in such a
manner which are
beneficial for all its
stakeholders.
An entity may not be
a going concern
when it is discovered
A conflict of interest
arises when the
official (CEO in this
Since stakeholders
are the groups whose
interest may affect or

Accounting Theory 7
that there are non-
pecuniary
commitments to
which the company is
subjected to (Yeh,
Chi and Lin, 2014).
case) favors one of
the individuals
instead of the
company due to the
involvement of some
personal interest
(Khan et al., 2016).
is affected by the
activities of the
company so the
executives should
consider that group
while creating value
for the company
(Hörisch, Freeman
and Schaltegger,
2014).
It is the responsibility
of the board that none
of the executives is
hampering the going
concern of the
company.
The board should
address the problem
of conflict of interest
by acting in the best
interest of the
company and its
officials.
With the help of this
theory, the executives
should act in the best
interest of the
shareholders.
Contrast The Going concern
theory concentrates
on if the company
would continue to
On the other hand,
the conflict of
interest is targeted
towards protecting
The stakeholders
have a major role in
affecting the affairs
of the company so

Accounting Theory 8
operate in the future
(Feldmann and Read,
2013).
the interests of the
company in case
there is a clash
between the interest
of the organization
and personal interest
of the individuals.
their interest should
be kept in mind while
managing its
administration (Lui,
2014).
It is only concerned
with the long-term
sustainability of the
company.
It focuses on
safeguarding the
interests of the
company.
This is only targeted
to protect the
interests of the
stakeholders while
creating value for the
company.
In this case, CEO
should not involve in
any contract which
would affect the
long-term
sustainability of the
company.
This theory should
direct the CEO to act
in an ethical and
honest manner in
order to protect the
interest of the
company.
The CEO should act
in the interest of the
stakeholders.

Accounting Theory 9
Hence to conclude, it can be said that it is the duty of the board and CEO of the company to
avoid the conflict of interest and to disclose the details of their pecuniary interest in order to
protect the interest of the company. The going concern theory can be applied in a way that the
CEO should act in an ethical and honest manner so that it does not pose a threat to the long-term
sustainability of the company. In this case, Staley acted unreasonably and he has posed a threat
to the stakeholders of the company thus violating the principles of stakeholder theory. He must
be heavily penalized along with strengthening the implementation of ‘Code Of Ethics’ of the
bank.

Accounting Theory
10
References
Baumfield , V.S.(2016) Stakeholder theory from a management perspective: Bridging the
shareholder/stakeholder divide. Australian Journal of Corporate Law. 31 (1) , 187-207.
Binham, C., Arnold, M. and Martin, K.(2018) Barclays CEO fined in whistleblowing probes.
Financial Times . [online] Available from: https://www.ft.com/content/80a541e6-4460-11e8-
93cf-67ac3a6482fd [Accessed 12th September , 2018].
Brower, J. and Mahajan, V.( 2013) Driven to be good: A stakeholder theory perspective on the
drivers of corporate social performance. Journal of business ethics. 117(2), pp.313-331.
CNBC(2018) Barclays CEO fined $870,000 for trying to identify whistleblower [online]
Available from: https://www.cnbc.com/2018/05/11/fca-pra-fine-barclays-ceo-jes-staley-for-
whistleblowing-probe.html [Accessed 12th September , 2018]
Fabrizio , L.F.D.(2016) The Pattern Of Fraudulent Accounting: Ethics, External Auditing And
Internal whistle-Blowing Process. Journal of Governance and Regulation.5(4),pp.12-25.
Feldmann, D. and Read, W.J.(2013) Going-concern audit opinions for bankrupt companies–
impact of credit rating. Managerial Auditing Journal, 28(4), pp.345-363.
Hörisch, J., Freeman, R.E. and Schaltegger, S.( 2014) Applying stakeholder theory in
sustainability management: Links, similarities, dissimilarities, and a conceptual framework.
Organization & Environment. 27(4), pp.328-346.

Accounting Theory
11
Khan, S.A., Sattar, M.A., Rathore, H.A., Abdulla, M.H., Ud Din Ahmad, F., Ahmad, A., Afzal,
S. and Abdullah, N.A.(2016) Conflict of interest. Acta Physiol. 216, pp.262-264.
Lui, A.(2014) Protecting whistle-blowers in the UK financial industry. International Journal of
Disclosure and Governance. 11(3), pp.195-210.
Morris , S. and Glover , J.(2018) Got away lightly': Barclays CEO fined $1.1m after trying to
expose whistleblower. The Sydney Morning Herald [online] Available from:
https://www.smh.com.au/business/banking-and-finance/got-away-lightly-barclays-ceo-fined-1-
1m-after-trying-to-expose-whistleblower-20180512-p4zew0.html [Accessed 11th September ,
2018].
Nielsen, R.P.(2013) Whistle-blowing methods for navigating within and helping reform
regulatory institutions. Journal of business ethics. 112(3), pp.385-395.
Parker, L.D., Guthrie, J. and Linacre, S. (2011) .The relationship between academic accounting
research and professional practice. Accounting. Auditing & Accountability Journal. 24 (1), pp.5-
14.
Yeh, C.C., Chi, D.J. and Lin, Y.R.( 2014) Going-concern prediction using hybrid random forests
and rough set approach. Information Sciences. 254, pp.98-110.