Ethics Case

I. Introduction

Ethical behavior should be observed in Accounting. It is the primary task of people who are involve in this profession to serve the public’s interest and might even sacrifice personal advantages. It is just not right to fool the public since they have little knowledge in accounting information. It is also the duty of accountants to avoid being associated with misleading information.

Principles in AICPA’s (American Institute of CPA’s) code of professional conduct expressed its commitment of accountants to the public interest. These principles give emphasis on ethical behaviors that all accountants must follow in line with their performance of duties. These include principles like competence, confidentiality, integrity and objectivity. One must have competence to perform one’s duty like providing relevant and reliable information that follows law, regulations and technical standards. Confidentiality is also needed so as not to use confidential information for one’s own advantage and also refrain from revealing confidential information. Integrity should be given importance by refusing to receive gifts and favors that might lead to conflict of interest. It also part of retaining one’s integrity is by refusing to communicate biased information and by not joining to activities that could harm the reputation of one’s profession. Lastly objectivity should be observed by communicating all information fairly and objectively, and reveal all relevant information.

There are situations that these ethical behaviors are challenged. For example, if you are put in a company and you have discovered some irregularities in serving the public. It is even more challenging if these regularities are accepted and tolerated by higher authorities and regard these matters as normal. The challenge will be put on you, whether to follow the steps that the company been observing or to take necessary action that might lead to sacrificing your own job.

A specific situation will be the situation that will be analyzing for our business case. It is about Rita Pelzer job as a newly hired assistant treasurer of Yorkshire stores. Her primary responsibility is to maintain the company’s high credit rating by paying all bills when due and to take advantage of all cash discounts. The former assistant treasurer, Jamie Caterino, is training Rita in her new duties. He instructs Rita that she continue the practice of preparing all checks “net of discount” and dating the last day of discount period. But according to Jamie, they always hold the checks at least four days beyond the discount period before mailing them. In that way they can get four days of interest on their money. Most of their creditors need their business and don’t complain. And if someone complains about them missing the discount period, they blame it on the mailroom or the post office. And he also believes that this kind of system is what everybody does.

This business case is then an ethics case that would primarily focus on ethical considerations that are to be followed or violated. This would be a relevant study since we have gain knowledge on some accounting information. We can easily spot the irregularities being done. This business case is also relevant because the situation is not far from what is really happening in some companies. It is unfortunate that the situation that we are presented in this business case is the trend that most company follow to fool the public for its own interest.

II. Statement of the Problem

Rita Pelzer was just hired as the assistant treasurer of Yorkshire Stores, a specialty chain store company consisting of nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of the departments Rita will manage. Her primary responsibility is to maintain the company’s high credit rating by paying all the bills when due and to take advantage of all cash discounts. Jamie Caterino, the former assistant treasurer who has been promoted to treasurer, is training Rita in her new duties. He instructs Rita that she is to continue the practice of preparing all checks “net of discount” and dating the checls the last day of the discount period. “But,” Jamie continues, “we always hold the checks at least four days beyond the discount period before mailing them. That way we get another four days of interest on our money. Most of our creditors need our business and don’t complain. And, if they scream about our missing the discount period, we blame it on the mail room or the post office. We’ve only lost one discount out of every hundred we take that way. I think everybody does it. By the way, welcome to our team!”

Questions:

1. What