ACCG100: Case Study Analysis - Harry Markham's Loyalty Dilemma

This case study examines the ethical dilemma faced by Harry Markham, a pension investment advisor, regarding the valuation of pension fund liabilities. The case explores his conflict between loyalty to his firm, the board of trustees, and his personal and professional ethics, particularly concerning the accuracy of financial reporting and the potential impact on stakeholders. The analysis delves into the responsibilities of an investment advisor, the importance of ethical conduct, and the consequences of prioritizing short-term gains over long-term financial health and transparency. The study concludes by highlighting the importance of business ethics in the face of conflicting loyalties and the potential ramifications of compromising ethical standards for financial gain. The paper also references the ethical codes of conduct that should be maintained by financial professionals.

Running head: ACCOUNTING IN SOCIETY
Accounting in society
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Case study: Harry Markham's Loyalty Dilemma
Introduction:
For every company’s success stands on the ethical behavior of the company towards
their customers. Harry Markham a pension investment advisor. Once in early 2012, he was in
a dilemma about the state of pension fund while he was involved into preparation for the
meeting along the board of trustees. Harry Markham completed his master of finance in the
year 2004 from the B- school of USA, and he was found to be working for investment
consulting associates (ICA) which had been involved into giving advice for funds related to
pension. Markham could closely remain connected with the way the liabilities of pension
funds were valued since Markham’s joining in the company. If Markham follows the
principles which are guided in the MOF and CFA programmer, he got those numeric which
were twice increased value compared to those reported for the funds. But he was not given
permission to make any adjustment to the official numbers, inspire of the client members and
the firm itself being least bothered in questioning them to make the board of trustees, the firm
was unable to make any objection for the board who did not want the complain that the
liabilities of the funds were much greater than number considered as per the government
accounting standard rules (GASR) rules. Markham’s concern was with the loyalties with the
firm, with the board of trustee, investors, investment expertise etc. Markham was in a
dilemma whether or not to raise the issue of liability in the conference room to the board of
the state pension fund. He knew that there was risk in the either side. But as he was bound
with the ethical code of conduct, he was finding it difficult to hide the whole thing (Swanson
& Frederick, 2016).
Discussion:
Harry Markham often said that ‘My role isn’t for deciding the liability value. As an
investment advisor his role is to offer different ethical views. He was challenged both by
ethically and practically. The central problem is an ethical issue for Harry Markham’s, CFA.
His loyalty related to his firm, the board of trustees as well as the pension holders is at odds
with his personal and professional standards.
As an investment advisor Markham need to identify the circumstances of the
investors, like their background, their ability to take risk, the annual income, the budget for
investment etc. to make the best investment advice. The CFA professionals said that one
should not give advice without identifying the client’s circumstances. And the next is they

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got those funds which are grossly being shortage of money, but the accounting could not
consider them to be as shortage of money. Before giving advice Markham let the firms know
where they are starting. Therefore, the client will be knowing that got to start from a multi-
billion dollar. On the other hand Markham was concerned about not getting what he could
believe were in accurate figures, he also know that his clients are afraid of getting bad news.
He was bothered about the fact that if he was to reflect issue related to liability then surely he
and his business company would be fired.
Investment committees and staffs believe that their main motto is to earn, at least at
the discounted rate given by the government. A sponsor told Markham that it could not be as
per planning members’ interest to decrease the rate of discount as the liability increase
would bring about shock to the taxpayers as well as to the state legislature that it would
determine the support related to political for the plan’. The sponsors of the plan are least
interested to know that they were low funded compared to the numbers those are showing
and the messengers are blamed. On the other hand if it was officially elected they don’t desire
a crisis as per their knowledge (Swanson & Frederick, 2016).
An advisor for investment is responsible to make good investment decisions, and have
a knowledge in client’s financial condition to make sound investment decision. This
sometimes involve those information which the clients are afraid of.
Generally, as a Chartered Financial Analyst, Markham need to attest the compliance
with respect to the ethical code of conduct. He need to air those information which is ethical
to do and are relevant to the firm and the client too. As an employee of the company,
Markham need to be loyal, need to know all the code of conducts, need to be ethical.
Ethics mostly concern on that is right as well as that is wrong in behavior related to
business judged as per the basis of the future standard of practice as per approval of the
society. Business ethics is a code of conduct consisting of regulation of the business activities
towards society as well as other business units. As well as business ethics defines the social,
legal, cultural and economic limits within which business organization are expected to plan
their activities. According to Markham’s dilemma relating to conflicting loyalties of a firm
explained as the loyalty of boards of trustees including such peoples engaged in making
investments decisions relating to public pension. Such person are hired by the firm as an
investment expertise the code of ethics needs to maintain by such individual persons to
conduct their performances effectively. The board of trustees will remain unaware for its

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dangers and will be happy related to the pension plan of state and will still have its own
support with respect to political. His self as well as professional views related to ethics are
violated. Moreover, the liabilities will deal as per the plan and the employees will not get
benefits or taxpayers will require to pay more (Swanson & Frederick, 2016).
Conclusion:
It can be concluded from the above discussion that the ethical issue arises from Harry
Markham is related to loyalty of firm, board of trustees as well as pensioners with personal
standards. It can also be concluded that funds are shortage of money but accounting does fail
to show them shortage of money. Further discussion reveals about responsibility of
investment advisor to take good investment decisions. It can also be concluded that business
ethics is a social, legal as well as cultural limits for which organization plan their activities
accordingly. Hence, it can be concluded that as per Markham people engaged in making
investments should be hired by firm as investment expertise being code of performance
efficiently.

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References:
Swanson, D. L., & Frederick, W. C. (2016). Denial and leadership in business ethics
education. Business ethics: New challenges for business schools and corporate leaders, 222-
240.