Ethical Decision-Making in Accounting

This case study examines ethical decision-making in accounting, focusing on conflicts of interest and professional conduct. It discusses various scenarios involving ethical dilemmas faced by accountants, including the implications of accepting gifts and the importance of integrity in financial dealings. The study highlights key ethical principles and offers alternative courses of action, emphasizing the need for ethical standards in the accounting profession.

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Accounting Information for Managers
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Question 1 - Ethical decision-making
Part A
Determination of two key facts of the case
In the particular scenario, there is a need to make necessary recommendation to the CEO
about the tender that must be accepted by the company. You have significant personal
interest in this tendering firm (Collier, 2015).
Determination of two ethical issues of the case
The basic ethical issue that arises in this scenario relates to the conflict of the interest. The
second ethical issue in the case is the high involvement of personal interest of the manager.
Determination of the three ethical principles which might be at risk in the given
scenario
The ethical principles that might be at risk in the given scenario include honesty and integrity
on part of the manager, professional values and practices of the company, and fair managerial
policies relating to the selection of tender (Birt et al., 2008).
Identified alternative courses of action: Consequences
Declare an interest and step outside of the decision-making process for this particular tender –
This is the most ethical and fair option that must be selected by the manager. By choosing
this alternative, the manager’s integrity and honesty would remain intact.
Declare an interest and remain part of the decision-making process and complete your
recommendation for your company – The declaration of the manager’s interest would be a
good move. But the objectivity of the manager relating to the decision-making power of the
manager cannot be ascertained (Demski, 2013). A probable consequence could be his
removal from decision-making panel due to resistance from other shareholders.
Don’t declare an interest and continue to do your job by making a recommendation – This
unethical method could damage the common interest of the undertaking and the manager
(Guy, 1990).
Part B
Determination of three key facts of the case
The small business owner has to make a financial payment to an overseas government
official. The market entry of the business depends on the official’s assistance in the new

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market. This monetary transaction seems new for the small business owner but it could be a
usual norm in the foreign nation (May, 1990).
Determination of one ethical issue in the case
The ethical issue that arises in the case relates to bribery. Since the government official
expects to receive financial gain from the businessman in return for his assistance, it is a key
ethical concern.
Determination of two ethical principles of the case
The two ethical principles of the case are honesty and integrity while performing professional
activities.
Identified alternative courses of action: Consequences
Make the payment – If the payment is made by the small business owner, most probably his
business would flourish in the overseas market. But in future, there is a chance that such
future payments would be expected from him (Guy, 1990).
Don’t make the payment – If the monetary payment is not made by the small business owner,
he would face stiff challenges to establish his business in the foreign land. But on the ethical
front, his integrity would be intact.
Question 2 – Code of ethics for professional accountants
 The particular scenario states that the auditor of Baba Ltd that seals with golf
equipment is offered a new set of golf clubs in appreciation of his work to date. This
gifting of golf clubs does not seem appropriate in this professional front since it could
compromise the integrity, and independence of the audit work. In case the auditor
accepts the gifts, the firm being audited would try to dominate his function and
objectivity.
 This scenario that has been presented highlights the issues relating to the
responsibility that a service provider has towards the general public including the
clients. The function of lending institutions is critical and loans of all the customers
must be approved based on their credit rating (Demski, 2013).
 In the particular scenario, a friend of the accountant approaches for a loan since he is
unable to obtain a loan elsewhere and the accountant approves the same for the friend
without performing normal checking procedure. This shows the breach of

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professional conduct due to personal contact. Such bias professional attitude must be
avoided and a report must be shared with the management for their approval of the
loan (May, 1990).
 This case states that an accountant is part of the local council works committee which
is in the process of considering various tenders for a park upgrade. His biased
favouritism attitude towards the tender submitted by his best friend without
considering other options shows unprofessional approach towards work. This act
could reduce the probability of other competent tenders to be ignored.
References
Birt, J., Chalmers, K., Beal, D., Brooks, A., Byrne, S. and Oliver, J., 2008. Accounting:
Business reporting for decision making. John Wiley & Sons Australia, Ltd..
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Demski, J., 2013. Managerial uses of accounting information. Springer Science & Business
Media.
Guy, M.E., 1990. Ethical decision making in everyday work situations. Greenwood
Publishing Group.
May, W.W. ed., 1990. Ethics in the accounting curriculum: Cases and readings.