CQUniversity ACCT20080: Ethics and Governance Case Study Analysis

This case study examines ethical dilemmas within a company facing challenges related to low wages paid to factory staff. The analysis focuses on the behaviors of the COO, Mr. Goodrich, and the management accountant, Arnold, applying ethical theories such as egoism, utilitarianism, and deontology to understand their actions and motivations. The study explores how Mr. Goodrich's actions, though seemingly harsh, can be viewed through the lens of egoism and utilitarianism, while Arnold's actions are analyzed through the lens of utilitarianism and deontology. The paper also applies the AAA decision-making model and APES 110 to guide ethical decision-making, particularly for Mr. Goodrich, considering ethical principles, legal laws, and the potential consequences of different courses of action. The case highlights the importance of transparency, ethical behavior, and the application of professional standards in resolving business crises and ensuring the well-being of all stakeholders.

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

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Executive summary
This paper is based on a case study where the company has being facing challenges because
of the low wages provided to their staffs who work in the factories. This case study focuses
on two important characters ad people who hold a position in the company which is the COO,
Mr. Goodrich and the management accountant, Arnold. This paper will analyze their
behavior by applying different theories of ethics and also provide decisions that can be taken
by these people making ethical considerations which may contribute to make proper decision
that will help the organization or the company rise and also overcome the existing issues.

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Introduction
Ethics is an important aspect in every organization. Ethical considerations in an
organization help in making the organization more systematic and positive which paves way
for a healthy business environment (Tidd & Bessant, 2018). This paper is a case study about a
company going through a crisis because of their mistake where they have paid low wages to
the factory staff and this case study will help in assessing and understanding the behaviour of
the important people in the business by applying theory of ethics and help in making ethical
considerations that would help people in the company make positive decisions that will help
them in addressing the issue and overcome the issue efficiently and effectively.
Part A
Mr. Goodrich’s behaviour using the theory of egoism
Mr. Goodrich holds an important position in the company and it reflects on his
behavior and the way he presents himself. From the case study, Mr. Goodrich comes across
as arrogant and rude because of his behavior with the Arnold, the management accountant
and Amanda, HR manager whom he terminates. He comes across as egoistic because of the
powerful position he holds however seen on a different light by applying the theory of
egoism, his behavior is justified. The theory of egoism states, capitalism is built on individual
achievement and personal ambition (Fang & Slavin, 2018). An egoist person irrespective of
their behavior can make ethical decisions that may benefit several people. Mr. Goodrich
irrespective of his rude behavior is desperate to make an effective decision in order to save
his position in the company and also save the company to protect the reputation of the
company which eventually benefits many like the stakeholders of the company. He is

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considered to be a competent leader as he is known as tough results achiever and he wants to
attain this reputation of his by saving the company from potential downfall.
Mr. Goodrich’s behaviour using utilitarianism theory
According to the theory of Utilitarianism, the main focus is put on the happiness is
attained by majority of the people aligning with the policies, rules and regulations (Mill,
2016). The theory also suggests that the good is seen in the end result however does not focus
on how the outcome may have been achieved (Bowen, 2017). From the case study it can be
seen that Mr. Goodrich has hurt the sentiments of Arnold, the management accountant and
Amanda, HR manager by misbehaving with them and also by terminating Amanda however
from the perspective of Utilitarianism, Mr. Goodrich has done all this to achieve his aim
which is to save the company from the untoward situation that has arised. Saving the
company will benefit many people in the long run and it will help Mr. Goodrich at the end as
well. With the application of the theory, Mr. Goodrich may be appreciated if the decision
taken by him helps save the company and the negative consequence like the termination of
the HR manager will not be focused on as the decision is beneficial for the majority.
Arnold’s behavior using the utilitarianism theory
Arnold, the management accountant is responsible and is sincere. In the case study it
can be seen that he has been treated poorly because of the bad news that was broken to the
COO of the company, Mr. Goodrich. Despite of the misbehavior and the constant yelling of
Mr. Goodrich at him, he for once did not argue. He was asked to present a full report with
possibilities which can help the organization overcome the situation of crisis which he did
present within a stipulated time. Applying the Utilitarianism theory from this act of his shows
his dedication to do good and help in making ethical decisions that benefit most of the people
that are associated with the business. Arnold is seen preparing a thorough report on the

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possibilities and provide their limitations aligning with the policies and rules and regulations.
He is suggests that COO of the company considers the decision of declaring their small error
to the Fair Work Commission and ask for sufficient amount of time in order to solve the
problem. This shows that Arnold decision making process involves ethics as he makes sure
legally the steps can be taken that may help the company to resolve the issue irrespective of
the reputation the company garners during this time to save the company. Arnold highly
believes in the end consequences thus not focus much on the way this may be attained.
Use of deontology in Arnold’s behaviour
Arnold, the management accountant is considered to ethical, responsible and a person
to have high moral. Applying the theory of deontology, Arnold’s behavior can be labeled as
rationale and moral. According to the theory there are several moral duties that individuals
have towards each other which later cannot be reduced to one or single imperative (Playford,
Roberts & Playford, 2015). The theory forces people to consider moral rights of other
individuals (Zamir & Medina, 2017). Arnold here wants to do well for people and protect the
basic human rights of the people as well. The possible solution that was proposed by him to
Mr. Goodrich in the company was ethical as the decision would have ensured transparency
between the stakeholders and the company and would give the company an opportunity to
make proper decisions later. The behavior of Arnold shows his respect for the other people
involved with the company which is currently going through a crisis and also wants the
company to make an ethical decision which is legal and later which may not have any
negative consequences.
Part B
Ethical decision making model

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For Mr. Goodrich to come to a positive conclusion an ethical decision needs to be taken
in order to make a concrete decision that benefits the company and people associated with the
company. To make this decision Mr. Goodrich should follow the AAA decision making
model to come to a positive conclusion.
The full form of AAA is American Accounting Association Model. This model was
introduced in the year 1990 and was taken from a report that was written by Rockness and
Langenderfer. The AAA model provides 7 steps that are logical which can be considered
while making decision that is aligned with ethics (Rafi & Hossain, 2018).
1. Consider the facts of the case- The company was paying the factory staff from the
wrong staff award. The company has been short paying their workers on leaves,
wages and superannuation.
2. Ethical issue in the case- The ethical issue in the case is that because of the mistake
of the company the staffs are suffering as they are getting less wages and are
sacrificing without any compensation which is highly unethical as they are not paid
for the amount of work they usually carry out every day and the working hours on the
other hand are not minimized and are not provided any benefits.
3. Norms, values and principle- Moral values are important when considering the case
study as it is morally not fair to provide the factory staff with less money and benefits
by making them work in normal shifts. It is important for the company to make
decision on the moral values, follow certain ethical norms like fair treatment, honesty
and justice (Trevino & Nelson, 2016). It is important to make decision considering the
legal laws as well, that later will not be a trouble for the company and they continue
with their operations.
4. Alternative courses of action- To make a proper ethical decision one needs to
categorize various decisions that may be applicable for the situation and then choose

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the one that best suits the situation to make the most effective decision (Schwartz,
2016). The company may choose to inform about their error to the Fair Work
Commission or appeal to the bank to grant a loan.
5. Best course of action- The best course of action from the possible two is to inform
about the mistake to the Fair Work Commission and take some time out to manage
and acquire support from the banks and the workers in order to overcome the issues.
This method will be perfect as this will ensure the stakeholders know about the
situation that helps in maintaining transparency.
6. Consequence of the possible actions- There are two possible actions that have been
considered one is informing the Fair Work Commission and the other is to appeal for
loan in the bank. Informing about the mistake in the organization to the Fair Work
Commission may bring back some negative impacts like bad name in the market
however it will give the time to the company to ethically redeem themselves and start
working properly and resolve the issue.
On the other hand, asking for a loan from the bank can be detrimental. If the company
due to some unavoidable circumstances is unable to clear the debt then the company
will have a downfall which will negatively impact all the stakeholders of the
company.
7. The decision- By analyzing all the factors and the consequences of the potential
outcomes it can be seen that informing the Fair Work Commission will be the best
option as it will be morally, legally and ethically right. It will maintain transparency
between the stakeholders and the company will get time to make strategic decision in
order to overcome the issue and make the company a success once again.

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Part C
Using APES 110
Arnold is a management accountant of the company that is currently going through a
crisis and has been said to keep this information confidential from his superior who is the
COO of the company. Arnold is currently the member of CPA, Australia where the APES
110 applies to him. APES 110 is considered to be a standard for ethics for all the members
belonging to any professional body which has adopted the code, APES 110 (George, Jones &
Harvey, 2014).
The APES 110 is a code which is divided into three parts. Part one talks about the
fundamental principles of the professional practice and also talks about the framework that
helps the members of the CPA identify the threats that may affect the fundamental principles,
evaluate all the significance of the identified threats and apple safeguards where essential and
necessary in order to reduce or eliminate the level of threats (Azimi & Naim, 2015).
Part B and part C of APES 110 shows examples of how framework can be applied in
certain situations of the public practice, services or in auditing and also for the members of
the organization or business in general.
Arnold in this case study is responsible and sincere which is understood from his
actions which shows his work ethics and his dedication with which he serves his
organization. Arnold in this case needs to be compliant with APES 110. According to the
code, professionals in the business need to aspire and attain five major principles which are
integrity, objectivity, professional skill, professional behavior and confidentiality (Jaber &
Mohammad, 2016). In order to be compliant with the APES 110, Arnold should consider not
listening to Mr. Goodrich and try talk about the problem or the issue with people serving the

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higher positions in the company like the CFO or the CEO. To attain integrity, one needs to be
honest in the organization and with the dealings (Menzel, 2014). There needs to be
transparency in the dealings and one should not hide any important details or information
from anyone.
Arnold, in important situations like this should take his own stand and should not be
influenced by anyone because of their personality or because of any other factor. Doing this
will be highly unethical which will violate the codes. Arnold needs to convey the information
about the issue of the company to the higher authority as it is his duty to do what his job
states him to do. Thus to maintain professional skill and knowledge it is important to ensure
the fact that the client receive positive professional service (Drucker, 2018). In the case study
it is important for Arnold to communicate the issues as it is his duty not to hide anything and
ensure the clients and others in the organization get the professional and quality service. It is
important to maintain confidentiality in a business even if the person may not do business
with that organization anymore however, in this case Arnold needs to communicate the issue
with the higher management who will be able to take the necessary step in order to make sure
that the company overcomes the issues it has been facing. In this step Arnold has to break the
code of confidentiality however it is for the betterment of the company which eventually
becomes beneficial for the majority in the company.
Arnold needs to communicate the issues to the management maintaining the
professional behavior which is to respect and courteousness. In context to professional
behavior one needs to behave respectfully, politely, follow the laws accordingly to carry out
their jobs smoothly (Schmidt et al, 2018). Employees or staffs should not make any decision
or do anything that may harm the organization or the reputation of the organization. Thus to
save the organization and in order to be compliant with the APES 110, Arnold needs to talk
about the issue that has cropped up in the company so that effective decisions can be taken in

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order to save the organization so that it can thrive in the market in the following years as
well.
There may be many threats to the fundamental principles like advocacy, familiarity,
self-interest, self-review and intimidation (Chapple et al, 2014). These may become a barrier
in taking ethical decision making. In the case study it has been seen that Arnold is intimidated
by the COO of the company, Mr. Goodwill because of ruthless behavior and the powerful
position that he holds in the company who has the capacity and the power to terminate
employees as he has done to the HR manager, Amanda. This may affect the principles that
Arnold currently has and may influence him to be quiet and not talk about the issue to anyone
in the organization not even the important stakeholders.
There are relevant safeguards that will be available to Arnold, one being the business
environment, where the ethical laws, rules and regulations are present which will favor
Arnold and also it can exist at the personal level where Arnold knows and can choose
between the right and wrong.
In order to be compliant to the APES 110, Arnold needs to be ethical and needs to
take the issue to the higher management so that will show his professionalism and his
consideration of ethics while making decision. Arnold needs to provide the report that he
made and show it to the management who are in higher position to understand the situation.
This will help Arnold to make the key members of the organization aware of the situation in
order to take immediate steps to come up with a proper decision that will help overcome the
issue.

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Conclusion
Ethics is important in business as ethics is one of the major reasons that give an
organization a positive reputation in the market that often helps an organization gain
competitive advantage in the market. In this case study, the company is going through a crisis
and it is important for the important employees make ethical decision to make sure the
company overcomes the issues with ethical considerations.
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