Ethics and Governance: Case Study Analysis - Module Name, Semester 1

This report presents a comprehensive case study analysis of ethical and governance issues within a company. It begins with an executive summary and table of contents, followed by an introduction that defines business ethics and unethical practices. The core of the report analyzes the behavior of individuals within the case using ethical theories, including egoism, utilitarianism, and deontology, to assess their actions. The report then applies the AAA model and APES 110 principles to the case, evaluating the ethical implications of the decisions made. The case involves Mr. Goodrich, the COO, and the ethical dilemmas faced by the management accountant and HR manager. The report concludes with a self-reflective analysis, examining the ethical decision-making processes and their consequences. The assignment demonstrates an understanding of ethical theories, decision-making models, and professional standards in a business context.

Running head: ETHICS AND GOVERNANCE
ETHICS AND GOVERNANCE
Name of Student
Name of University
Author Note

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Executive Summary
In this report a detailed analysis has been done on the application of the business ethics in
relation to a given scenario. A company is guided by the moral principles set out by the business
ethics. Unethical business practices are the violation of such moral principles by the businesses.
There are various theories for the application of moral principles and ethics in a business. The
report focuses on the theories of egoism, utilitarianism and deontology to analyze behavior of
those mentioned in the given case. In addition to this the report also analyzes the AAA model in
relation to the facts mentioned in the case. Further the report is seen to be applying the APES10
principle in the case. Finally the report is concluded with the self-reflective analysis in the given
situation.

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Table of Contents
Introduction......................................................................................................................................3
Part A...............................................................................................................................................3
1. Egoism Theory.........................................................................................................................3
2. Utilitarianism Theory...............................................................................................................4
3. Utilitarianism Theory...............................................................................................................5
4. Deontology Theory..................................................................................................................6

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Introduction
A company is guided by the moral principles set out by the business ethics. Unethical
business practices are the violation of such moral principles by the businesses. Ethics can be
described as the branch of philosophy dealing with the moral principles and defining the
standards for right and wrong conducting the human characters (MacKinnon & Fiala, 2014).
Similarly business ethics can be described as the moral principles set for guiding the behavior of
any business (Ferrell & Fraedrich, 2015). In this report a detailed analysis has been done on the
business ethics theories in a given scenario. The egoism, utilitarianism and deontology theories
have been applied for behavior analysis (Carroll, and Buchholtz, 2014). In the second part of the
report the application of the AAA model has been done in relation to the given scenario. In
furtherance, in third part of the report the APES110 model has been applied.
Part A
1. Egoism Theory
Egoism or ethical egoism can be described as a normative or prescriptive theory
concerned with the behavior of a person. Ethical egoism can be described as the view explaining
that every person should be pursuing their own self-interests and should not be obliged for
promoting the interests of any other person (Broad, 2014). According to the theory serving one’s
self-interest can also be seen as a morally right action.
Behavior of Mr. Goodrich

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Applying the egoism theory in the current scenario, it can be seen that the behavior of
Mr. Goodrich was following the ethical egoism theory. By not disclosing the issues relating to
underpaying of the wages, leaves and the superannuation to the staffs in the factory and further
making the HR sign a non-disclosure agreement Mr. Goodrich can be seen to be following the
principle of the pursuit of self-interest instead of thinking about the interests of the staffs as a
whole. Not disclosing to the staff about the facts about underpayment by the company was done
with an intention for the satisfaction of the self-interest of the company which is the main
concept of ethical egoism. Thus in the current scenario Mr. Goodrich has followed the theory of
ethical egoism.
2. Utilitarianism Theory
The theory of utilitarianism, founded by Jeremy Bentham, follows the concept of greatest
good for everyone. The theory can be described as a moral theory advocating the actions which
can be seen as promoting the happiness of the people and rejects any action that can be causing
any kind of harm to the people (Vaughn, 2015). As per the theory an action can be termed as
right or wrong solely on the basis of the consequence of the action choice that has been made by
a person. Maximizing general utility that is identifiable with happiness can be seen as the basic
principle of the utilitarianism theory (Mulgan, 2014).
Behavior of Mr. Goodrich
The utilitarianism theory can be seen as advocating to provide the answer for a practical
question “what a man ought to be doing?” The theory answers the question as to be acting in a
way that can be seen as producing the best consequences as a result of the action that could be
possible. In the present scenario it can be said that the behavior of Mr. Goodrich is in

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contradiction of the theory of utilitarianism. Keeping the facts of the problems faced by the
company regarding the underpaying wages, the superannuation and the leaves of the staffs of the
factory, making the HR to be signing a non-disclosure agreement all these consists the behavior
of Mr. Goodrich to be establishing the self-interest of the company and consequently establishing
his personal interest instead of the greatest good of the staffs of the company as suggested by the
theory of utilitarianism. Thus in conclusion it can be stated that Mr. Goodrich’s behavior is not in
accordance with the theory of utilitarianism.
3. Utilitarianism Theory
The principle pioneers of the utilitarianism theory are John Stuart Mill and Jeremy
Bentham. Any action is considered as right if the intention of such action can be proved as to
promote happiness and if the intention of any action is proved as to promote unhappiness it is
considered as wrong as per the concepts of the theory (Mill, 2016). The utilitarianism theory is a
category of consequentialism. The theory can be seen as contemplating a person’s actions only
on the basis of right and wrong.
Behavior of Arnold
Arnold, in the present scenario, has been put in an ethical dilemma. If he decides to
follow the orders of his boss Mr. Goodrich and keeps silent about the problems faced by the
company it would lead to the loss for all the staffs employed in the company, and would further
be at odds with the utilitarianism theory. On contrary, if Arnold reveals to the staffs the errors of
the company, by considering the greatest good for the staffs he would risk the loss of his job and
he would be further risking the lose of any future opportunity with any corporation. However the
second option can be seen as the ethical and right decision, according to the utilitarianism theory,

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as that option would ensure the maximum happiness for everyone employed in the company,
who would have been affected by the acts of Mr. Goodrich. Henceforth, it is seen that if Arnold
follows the option to disclose the problems to the staffs it would fulfill the conditions of the
utilitarianism theory.
4. Deontology Theory
The deontological theory is a normative ethical theory that states that the morality for an
action is required to be based on a set of rules or principles instead of the consequences or the
outcomes of the actions. The main pioneer of this theory is Immanuel Kant, who argues in the
theory that people should act from their duty to be acting in way that would be considered as
morally right (Bowie, 2017). In furtherance, Immanuel Kant was seen to be arguing about the
fact that the motives of any person would be construing the rightness or wrongness of an action
instead of the consequences of such action. Applying the deontology theory of Kant in the
present scenario it has been observed that if Arnold selects to be disclosing the problems of the
company to the staffs he would be acting from his duties in a way that can be considered as
morally right according to the Kantian theory. However if he does not reveal the truth as per the
orders of his boss Mr. Goodrich, both his acts and the intent for the concealment of the problem
would be seen as ethically wrong.
Part B
In many decisions of business an ethical element can be seen as present, which affects the
stakeholders of the company in multiple ways. The American Accounting Association (AAA)

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model is seen as suggesting for the purpose of decision making a seven-step process taking into
account the ethical issues. The steps are as follows:
Facts
The facts of the present case are that the COO of the company Mr. Goodrich is seen to be
concealing the fact that the company had been underpaying the staffs their wages, their
superannuation and their leaves amounting to almost $6 million. Further the COO is seen as
making the HR manager sign a non-disclosure agreement and threatening the management
accountant to not disclose the problems to anyone.
Ethical Issues
The ethical issue in this case is whether the decision of Mr. Goodrich for not disclosing
the problems can be considered as ethical.
Identifying Principles
The current case can be seen to be based on the morality and egoism principles. These
two principles can be seen as conflicting with one another. Morality is the consideration of the
interests of the workers and egoism is the consideration of the company’s interests.
Identifying Alternate course-of-action
An alternate opinion is seen to be suggested by Arnold who is of the opinion that
confessing the mistakes of the company and requesting some time for the arrangement of the
funds would be beneficial to both the company as well as the company staffs.

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Best course of action
As per the morality principle, Arnold’s opinion can be considered as a suitable option as
it would benefit the staffs as well the company’s reputation will not be at risk as well.
Consequence for each course of action
If the company follows the decision of Mr. Goodrich for not disclosing the errors of the
company it would be seen as to be leading to the loss of the staffs. The decision, however, would
be saving the company from going into insolvency. Mr. Goodrich’s order for erasing all the
relevant data could also be potentially leading towards criminal liability. Destroying records of
the company from the database of the company can be seen as a serious misconduct and would
be attracting for both criminal liability and ethical liability.
The opinion provided by Arnold may lead him in the risk of facing severe consequences.
as he would be putting his own interest in danger.
Decision
The best ethical outcome of the scenario in this case is following the opinion of Arnold
(ACCA, 2019).

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Part C
APES 110
The APES110 Code of Ethics for Professional Accountants has been issued by the
Accounting Professional and Ethical Standards Board (APESB). The role of APESB can be seen
as to be developing and issuing the ethical and professional standards in the interests of the
public and is applicable to the CPA Australia, the Institute of Public Accountants and the
Chartered Accountants ANZ. In the present scenario, it is required to assume that the accountant
manager of the company Arnold is a member of CPA and hence the APES 110 Code of Ethics
for Professional Accountants would be applicable towards him. The APES 110 is seen to be
laying down certain fundamental principles, under the Part A section 100.5, that the members are
required to be complying with. These principles are as follows:
Integrity- the members of the APESB are required to be honest and straightforward in relation to
both business and the profession as a whole.
Objectivity- There should not be any bias, conflict of interest or undue influence towards any
person for the override of professional and business judgments that the members would allow.
Due Care and Professional Competence- the members are required under this code to be
maintaining a required level of knowledge and professional skills to ensure the receiving of
professional services that can be considered as competent by the clients or the employer on the
development of current practice, legislation and techniques and for diligently acting in
accordance with the applicable the technical as well as professional standards.

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Confidentiality- the APESB members have been required for respecting the confidentiality of
any information acquired as a professional or business result and thus should not be disclosing
them to the third parties any such information without the precise or proper authority, except in
presence of any legal or any professional right or duty for disclosure of such information, and
further should not be using the particular information for fulfilling their own interests or the
interests of any third party.
Professional Behavior- the members of APESB are required to be complying with all the laws
and the regulations that can be considered as relevant and should be avoiding any action that
could potentially discredit their profession.
As per section 100.12 of the APES 110 Code of Ethics for Professional Accountants
there are various threats present that every needed to be complying with. These are as follows:
 Self interest threats
 Self review threats
 Advocacy threats
 Familiarity threats
 Intimidation threats
`The safeguards to the threats can be seen to be present under the provisions of section
100.13 of the APES 110 Code of Ethics for Professional Accountants. The safeguards are as
follows:
Profession, regulation and legislation created safeguards under Section 100.14 of the
code:

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 Requirements for the education, training and experience to enter in the profession
 Requirements to continue the professional developments
 Corporate Governance Regulations
 Professional standards
 Professional or regulatory monitoring and disciplinary procedures
 External review report by third party empowered legally.
Safeguards that have been created by the accounting profession, legislation, regulation or any
employing organization under section 100.16 of the APES 110 Code of Ethics for Professional
Accountants:
 Effective and well-publicized complaint systems that can be seen to be operated by any
regulator, or any employing organization, that can be seen as enabling the members,
colleagues and the employers to draw the necessary attention towards any kind of
unethical or unprofessional behavior.
 Duties that had been stated in an explicit way for the reporting of breach of the ethical
requirements (Cpaaustralia, 2019).
In the present scenario the company can be seen to be underpaying the staffs their wages,
their superannuation and their leaves. When the problem was brought into the notice of the
COO of the company, he was seen to be instructing Arnold not to disclose the problem to
anyone. As Arnold is a member of CPA Australia and is bound to be in compliance with all
the provisions of the APES 110 Code of Ethics for Professional Accountants he is seen to be
under an ethical dilemma.

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Following the fundamental principles laid down by the APESB is the best option for
Arnold in this case. If he follows the principles of objectivity, integrity, due care and
professional competence, professional behavior and confidentiality he would be eligible for
the safeguards mentioned under the APESB. Therefore the best course of action for Arnold
would be to report the all the breaches of the company by being in compliance with the
APESB and not follow the instructions of Mr. Goodrich.

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Conclusion
In conclusion of the analysis of all the facts that had been present in the case it can be
said that the company was in breach of their ethical duties by underpayment of wages and
superannuation and leaves of the staffs. Further keeping the information from the staffs are also
ethically wrong.

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Reference
ACCA. (2019). Ethical decision making | ACCA Global. Retrieved 24 August 2019, from
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-
study-resources/strategic-business-leader/technical-articles/ethical-decision-making.html
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Broad, C. D. (2014). Five types of ethical theory. Routledge.
Carroll, A.B. and Buchholtz, A.K., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Cpaaustralia. (2019). APES 110. Retrieved 24 August 2019, from
https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-
ethical-standards/apes-110-code-of-ethics-for-professional-accountants
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson
Education.
MacKinnon, B., & Fiala, A. (2014). Ethics: Theory and contemporary issues. Nelson Education.
Mill, J. S. (2016). Utilitarianism. In Seven masterpieces of philosophy (pp. 337-383). Routledge.
Mulgan, T. (2014). Understanding utilitarianism. Routledge.
Vaughn, L. (2015). Doing ethics: Moral reasoning and contemporary issues. WW Norton &
Company.

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