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Introduction

In the current business environment, companies and individuals in the industry are needed to maintain high standards of ethical behaviors. This will help to promote efficiency and productivity in the industry. The accounting environment in the past has witnessed increased unethical behaviors. Therefore, the accounting environment has exposed accountants to numerous accounting challenges and dilemmas as they execute their roles within the industry. Accountants’ undertaking any financial data or information, which may include the firm’s financial statements, should be operated based on the business accepted ethical behaviors. Such information is critical to the firm’s status both in the business perspectives and legal aspects. Accountants’ own view, as they undertake promotional business events and compensation issues within the company, requires exercising ethical standards (Chaffee, 2012).

In comprehending such significant dilemmas in financial industry, which mainly face accountants, individuals are able to analyze critically the case of Daniel Potter, a competent accountant.  Daniel Potter has qualifications in AICPA accountancy and currently works at Barker Greenleaf Company. He has heightened understanding and competence with the majority of professional guidelines that are linked to ethics as an accountant. Therefore, Daniel is well conversant with accountant ethics that will allow him avoid any dilemmas that may pose a challenge to his career.

The case under consideration regards an ethical dilemma that surrounds Daniel Potter. During the audit process of a subsidiary of a vital customer, Daniel discovers an inaccurate reporting of a neglected building. The value of the firm has been reported to be approximately 2 million dollars while as per the calculations of Daniel, the property is less than 100,000 dollars. Therefore, the ethical dilemma is whether Daniel must consider this fact in his work as provided by ethical and audit guidelines by various auditing and accounting agencies, or ignore the ethical principles and proceed with his work. Daniel has had several confrontations with his senior supervisor, Oliver Freeman, who has been termed by Gene, an assistant supervisor, that Daniel was strict and inflexible authoritarian. 

Stakeholders

In the case analysis, there are four principal stockholders who play a key role in the dilemma. The first stockholder is Daniel Potter, who is determined to undertake a career that is free from malpractices; however, his supervisor has insisted that he should work under his instructions. Daniel, therefore, is determined to carry out his work with utmost honest and as per the set code of conduct and practices (Chaffee, 2012). From the analysis it is evident that Daniel has no negotiation policy when it comes to issues to do with business ethical practices and in observing this, his main concern is upholding high reputation of his employer as well securing early promotion for himself. The second stakeholder in the case is Greenleaf Baker, which is the audit and accountancy Company and has the mission of increasing its customer base by creating new niche in the market, thus increasing the company’s sales. Consequently, this will lead to increased profitability and stability of the firm, as well as sustaining its position in the market (Bowling & Hoffman, 2009).

The third stakeholder in the case is Oliver Freeman, who has a mission of upholding his preeminence over his juniors in the company. In addition, he wants to see that he maintains excellent working relations with the firm’s customers and displays his loyalty to Greenleaf Baker Company by sustaining customers unreservedly for the company. He wants Daniel to obey his orders and do what he feels is the right channel for the company. The stakeholder in this scenario is the customer’s management, which has material misstatement in its financial documents or books of accounts. However, it is nonetheless interested in getting clean audit account for its subsidiary.

Course of Action

Because the matter is weighty and of equal importance, it will be in order for Daniel Potter to take premeditated and precautious measures that will not affect his reputation as accomplished accountant. Therefore, this means that Daniel has the role of analyzing all the possible scenarios present in the ethical dilemma and take appropriate action. It is advisable for Daniel to discuss the ethical dilemma discretely with other members of the staff to arrive at a concrete solution, whether or not the matter concerns them. Therefore, Daniel should consult those staff members who are known for being reliable and productive in aspects of decision making process in such weighty matters (Chaffee, 2012).

If the ethical dilemmas are shared or if Daniel is acutely concerned about ethical dilemma, it will be correct to present the matter to the personnel department in order to make an informed decision. This means that he must discuss the ethical dilemma with the concerned person in the department and take brief notes of the deliberation. This undertaking must take into account his dilemma and elucidate his position to the senior management of the company. In case where discussion process does not yield any fruits, Daniel must proceed with the matter to his mentor, who is a senior member of the management team in the company. Daniel might take an avoidance position at the first instance; however, it will be paramount so that it protects him in the company. If ethical dilemma is not resolved at all by any party at the company level, Daniel has the final option of reporting the matter to the ethics and professional committee of the AICPA (Bowling & Hoffman, 2009).

Conclusion

Therefore,in this scenario it will expected that Daniel must continue to uphold high integrity and professionalism in his work, as well as ethical and professional guidelines and maintain his position in the matter. By yielding to the pressure of the supervisor, not only will he be violating the principles of professional conduct, but also betraying his professional integrity in order to accommodate Baker Greenleaf Company, which eventually will cost the company’s reputation. If Daniel ignores the matter, he would later be accused of not doing the right thing, despite of noticing the error, and might be accused of trying to “cover up” this malpractice in the company.

In this scenario, the philosophical approach employed to arrive at a decision is the deontological approach, which is applied to ethical dilemmas. The theory belongs to the absolutist school of thought, which states that the most notable concept is principles in an ethical dilemma, and not the result. This means that in order to establish whether an action is right or wrong, there is a need to know the morals in place. In the case of Daniel, code of professionalism and integrity is the most significant (Chaffee, 2012).

Table of Shareholders’ Impact Analysis

Stakeholder

Interest

Influence

Urgency

Persuasiveness

Importance

Daniel Potter

He is interested in upholding high integrity and professionalism in his work. He is also interested in working independently and honestly.

Low

Medium

High

Medium

Client’s Management

It has the interest of getting clean audit opinion regarding its operations, despite of awareness that there is misstatement; where in this case it is a material misstatement or overestimating the values.

Medium

High

Low

medium

Baker Greenleaf

The company is interested in continued expansion of its business, however, upholding its reputation within the industry.

High

High

High

High

Oliver Freeman

Oliver is interested in providing clean audit report to the customer, despite knowing that there are material challenges in the accounts. He is interested in securing completely the client for the Greenleaf Baker.

High

High

High

High

 

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