BMA735 Management Ethics: A Detailed Case Study of IOOF Holdings

This case study solution examines the ethical lapses within IOOF Holdings, an Australian financial giant, focusing on issues such as misrepresented performance numbers, front running, and insider trading. It identifies the core problem as a compromised ethical culture leading to fraudulent activities and embezzlement, impacting stakeholders and shareholders. The analysis proposes alternative solutions, including establishing checks and balances, implementing a code of ethics, ensuring legal guidelines regarding conflict of interest, and hiring oversight officers. The solution assesses the advantages and disadvantages of these measures, ultimately advocating for a robust checks and balances system with regular audits to prevent fraudulent activities. This document is available on Desklib, a platform offering a wide range of study tools and resources for students.

Running head: ANALYSIS OF CASE STUDY 2
Analysis of Case Study 2
Name of the Student
Name of the University
Author Note

1ANALYSIS OF CASE STUDY 2
Table of Contents
1. Identification of the Key Problem......................................................................................2
2. Analysis of the Key Issues Presented in the Case Study....................................................2
3. Alternative Solutions to the Problems Presented in the Case Study...................................2
4. Advantages and Disadvantages of the Solutions that have been given..............................3
5. Selecting the Best Solution out of All the Solutions Mentioned........................................3
References..................................................................................................................................4

2ANALYSIS OF CASE STUDY 2
1. Identification of the Key Problem
The main problem that can be detected in the scenario that has been given is that the
IOOF which is a financial giant in Australia, has been engaging in corrupt practices with
claims being made of performance numbers being misrepresented, front running and insider
trading, leading to questions being raised about the ethical culture of the organization.
Documents and internal emails that have been retrieved by Australian Financial Review have
revealed errors and breaches when it comes to the unit pricing of some of the cash
management trusts of IOOF (based on case study provided).
2. Analysis of the Key Issues Presented in the Case Study
What is clear upon reading the case study is that there are unethical practices being
deployed in the management of funds at IOOF. The top level management of the organization
has been corrupt and fraudulent in the way in which it has been using the financial resources
of the firm to run its business operations. This fraud and embezzlement is unacceptable, given
that the interests of stakeholders and shareholders both are being heavily compromised as a
result of such fraudulent activities (Endenich and Trapp 2018).
3. Alternative Solutions to the Problems Presented in the Case Study
The following solutions can be considered in order to resolve the problems that have been
presented in the case study –
 Creation of a checks and balances system for the performance of vital functions such
as the payment of bills and remuneration and the auditing of financials (Kangas et al.
2018).

3ANALYSIS OF CASE STUDY 2
 Establishing a code of ethics to the proper and adequate management of the financial
resources of the organization (Finkler et al. 2018).
 Ensuring that legal guidelines are in place and have been circulated among
shareholders and stakeholders regarding conflict of interest (Karcher and Presser
2018).
 Hiring officers specifically to oversee and ensure the adequate management of
financial resources (Rezaee 2018).
4. Advantages and Disadvantages of the Solutions that have been given
The advantages of the solutions that have been given above are that the corrupt
practices that have taken place within the IOOF will be suitably controlled. Having a checks
and balances system in place will definitely help the top level management of the
organization to keep a firm eye on how funds are being used, and embezzlement if it takes
place, is something that will almost be immediately detected. Having a proper checks and
balances system in place, ensuring that legal guidelines are provided with regard to conflict
of interest and recruiting officers to oversee the proper management of finances in addition to
establishing a code of ethics will go a long way in getting employees at IOOF, from the top
level to the bottom level to work in an ethical fashion. The disadvantage of the above
mentioned solutions is that it will create a restrictive and uncomfortable environment for the
performance of business operations (Rezaee 2018).
5. Selecting the Best Solution out of All the Solutions Mentioned
The best solution out of all the solutions that have been given is to establish checks
and balances system for the proper management of funds. This is a system that will make
sure that audits are carried out on a regular basis on the use of funds, preventing the
possibility of fraudulent activities like embezzlement in the bargain (Sila 2018).

4ANALYSIS OF CASE STUDY 2

5ANALYSIS OF CASE STUDY 2
References
Endenich, C. and Trapp, R., 2018. Ethical Implications of Management Accounting and
Control: A Systematic Review of the Contributions from the Journal of Business
Ethics. Journal of Business Ethics, pp.1-20.
Finkler, S.A., Smith, D.L. and Calabrese, T.D., 2018. Financial management for public,
health, and not-for-profit organizations. CQ Press.
Kangas, M., Kaptein, M., Huhtala, M., Lämsä, A.M., Pihlajasaari, P. and Feldt, T., 2018.
Why do managers leave their organization? Investigating the role of ethical organizational
culture in managerial turnover. Journal of Business Ethics, 153(3), pp.707-723.
Karcher, N.R. and Presser, N.R., 2018. Ethical and legal issues addressing the use of mobile
health (mHealth) as an adjunct to psychotherapy. Ethics & Behavior, 28(1), pp.1-22
Rezaee, Z., 2018. Supply chain management and business sustainability synergy: A
theoretical and integrated perspective. Sustainability, 10(1), p.275.
Sila, I., 2018. Linking Quality with Social and Financial Performance: A Contextual, Ethics‐
Based Approach. Production and Operations Management, 27(6), pp.1102-1123.