1 Ethical Analysis of Mini Case 3 Mahesh Manda (2115866) University Canada West BUSI-608-08: Ethics, CSR and Business Environment Aia Shilibekova 24th May 2022 2 Introduction Laura was working as an accountant at a small family-owned firm. She was returning after a 5-year break from extended maternity leave. She found that, in her absence, the owner has manipulated the Tax returns. He later admitted and told her it was due to the company’s slow business, and he will allow her to report appropriately from now on. Laura was in an ethical dilemma. If I were the ethical officer, I would have to choose the right decision based on ethical thinking. This report discusses the implications of various decisions and various approaches to make the ethically chosen decision that I would make. Options and Ethical Implications First, we must observe that there are four stake holders involved namely the Firm, Tax department, Society and Laura herself. There are two options for Laura to choose. Either she can report the mis practice and correct the Tax returns for the past period, or she can ignore the malpractice and she can continue with the job with proper reporting. She can do this because technically, she was not the one who filed the Tax returns as she was on leave at the time of the misdoing. Option 1 Do not Report the Misdoing She may feel empathy for the owner as he was kind enough to grant her 5 years of maternity leave while going through a slow phase of the business. If she does not report, the implications are as follows. Positive Implications 1. She would be loved at the work for her understanding of the situation. 2. The business would prosper with the temporary respite in Taxes during the malpractice. Negative Implications 1. The Revenue services department may find out the misdoing and charge the small business with major fines which it can not afford 2. Her own Licence of accounting would be withdrawn 3. She would be contradicting her own beliefs and morals like professional integrity Option 2 Report the Misdoing She can report the misdoing and immediately initiate the corrections required on additional taxes to be paid and try to minimize the damage to the company and self. The implications are as follows 3 Positive Implications 1. Her Licence may be lesser under threat of suspension 2. She would be adhering to her values and morals like Professional integrity 3. The society would be benefiting from her decision because of more taxes collected. Negative Implications 1. The small business may suffer major fines and even closure 2. She would lose her job Approaches to Ethical Thinking In this case, I believe that three approaches of ethical thinking are applicable which are explained by Sexty (2020). I will evaluate the options available in each of the approaches. Common Good Approach Common good approach tells that the decision taken should benefit not just the individual but will benefit the whole society in the common good of all. If I do not report the malpractice, society as a whole is suffering because, the reduced tax collection however small it may be is a loss to the society. Additionally, when the Tax authorities find out about the malpractice, it would charge fines much higher than those imposed if voluntarily correcting the Tax filing. Finally, Laura herself will be safe as her License would not be withdrawn. Thus, Common good of all is possible by Option 2 that is reporting the malpractice. Utilitarian Approach Utilitarian approach tells us that the decision should result in greatest benefit and least harm. By reporting the malpractice and correcting the returns, Laura is actually helping the business because Five years is a long period of malpractice, and the Tax department would surely find the misdoing. The fines charged on voluntary correction of Tax filing are far lesser than the fines charged upon revelation through a Tax audit. From the point of view of Society and Laura herself, the benefits are in the form of increased Tax collection and a secure accounting license. So, by utilitarian approach, it is far beneficial and less harmful to report the misdoing and correcting the Tax filings. Virtue Approach 4 Virtue approach guides the decision by the influence of inherent values like integrity, love, courage etc. By reporting the misdoing, Laura is showing Courage in not being afraid to lose her job, Integrity in being professional with her job and being a good citizen to the society although it seems dis-compassionate towards the firm. Decision and Conclusion Based on the ethical thinking approaches, I as an Ethics officer would do the following. I will explain the possible repercussions of an audit finding by the tax department to the owner. I would assure him to take all possible actions to minimise the harm in terms of fines. I will re-file the Tax returns for the five-year period while explaining as politely as possible our firm’s mistake in reporting. In fact, as explained by Kopp (2021), I would use Capital loss carry over technique to minimise the losses for the corrected period of those five years. Additionally, I would offer to resign if the firm’s owner does not like my decision. All the three approaches of ethical thinking compel me as an ethical officer to take this decision with full conscience. Feedback by Priya Sharma Hey Mahesh, the case chosen by you is interesting as it makes the Ethics Officer think harder on what course of action would be ethically correct for Laura’s situation. I appreciate your comprehensive analysis on her prospective actions, where you weighted the possible outcomes of her decisions. However, I would like to add few points as the feedback that you may like to consider: 1. Although the analysis looks good, you may want to concise the report to present the reader with the quicker glance on the scenario and your analysis. 2. The report can be changed to address the management of organisation about the analysis of ethical issue and approach to be applied for ethical decision and in my opinion must not be focussed on employee actions. Here, we as an Ethics Officers suggest what the company must do in case of such ethical scenarios. Overall, I liked and agree with all the ethical approaches you considered, explaining each of them and connecting it with the possible outcomes. Your approach to the report writing is excellent covering the introduction, analysis, and the conclusion. 5 Introduction Laura, who was working as an accountant at a small family-owned firm was returning after a 5-year maternity leave. In her absence, the owner has manipulated the Tax returns to cover his personal financial slump owing to his gambling habit. Laura was in an ethical dilemma. If I were the ethical officer, I would have to advice the ethically thought decision to the owner. Options and Ethical Implications First, we must observe that there are four stake holders involved namely the Firm, Tax department, Society and Laura herself. There are two options for Laura to choose. Either she can report the mis practice and correct the Tax returns for the past period, or she can ignore the malpractice and continue with the job with proper reporting. She can do this because technically, she was not the one who filed the Tax returns as she was on leave at the time of the misdoing. Option 1 Do not Report the Misdoing She may feel empathy for the owner as he was kind enough to grant her 5 years of maternity leave. If she does not report, the implications are as follows. Positive Implications 1. She would be loved at the work for her understanding of the situation. 2. The business would prosper with the temporary respite in Taxes during the malpractice. Negative Implications 1. The Tax department finds out the misdoing in an audit and charges the small business. 2. Her own Licence of accounting would be withdrawn 3. She would be contradicting her own beliefs and morals like professional integrity Option 2 Report the Misdoing She can report the misdoing and immediately initiate the corrections required on additional taxes to be paid and try to minimize the damage to the company and self. Positive Implications 1. Her Licence will not be under threat of suspension 2. She would be adhering to her values and morals like Professional integrity 3. The society would be benefiting from her decision because of more taxes collected. Negative Implications 1. The small business may suffer major fines and even closure 2. She would lose her job 6 Approaches to Ethical Thinking In this case, I believe that three approaches of ethical thinking are applicable which are explained by Sexty (2020). I will evaluate the options available in each of the approaches. Common Good Approach Common good approach tells that the decision taken should benefit not just the individual but will benefit the whole society in the common good of all. If I do not report the malpractice, society is suffering because, the reduced tax collection however small it may be is a loss to the society. Additionally, a Tax audit would close the firm which is much worse than voluntarily correct the Tax filing. Finally, Laura herself will be safe as her License would not be withdrawn. Thus, Common good approach derives reporting the misdoing as ethically right decision. Utilitarian Approach Utilitarian approach tells us that the decision should result in greatest benefit and least harm. Five years is a long period of malpractice, and the Tax department would surely find the misdoing. The fines charged on voluntary correction of Tax filing are far lesser than the repercussions of a Tax audit which is firm closure. From the point of view of Society and Laura herself, the benefits are in the form of increased Tax collection and a secure accounting license. So, by utilitarian approach, it is far beneficial and less harmful to report the misdoing. Virtue Approach Virtue approach guides the decision by the influence of inherent values like integrity, love, courage etc. By reporting the misdoing, Laura is showing Courage in not being afraid of losing her job, Integrity in being professional in duty and being a good citizen to the society. Decision and Conclusion Based on the ethical thinking approaches, I as an Ethics officer would do the following. I will explain the possible repercussions of an audit finding by the Tax department to the owner. I will convince him to have Laura re-file the Tax returns for the five-year period while explaining as politely as possible to the Tax department, our firm’s mistake in reporting. I would assure him that Laura will take all possible actions to cushion the blow in terms of fines. In fact, as explained by Kopp (2021), Laura would use Capital loss carry over technique to minimise the losses for the corrected period of those five years. Nevertheless, Laura would offer to resign if the owner does not agree with the decision. All the three approaches of ethical thinking compel me as an ethical officer to take this decision with full conscience. 7 References Sexty, R. (2020, February 10). Canadian Business & Society: Ethics, Responsibilities, And Sustainability (5th ed.). McGraw Hill. https://www.mheducation.ca/canadian-businesssociety-ethics-responsibilities-and-sustainability-9781260065916-can-group Kopp, C. (2021, November 29). Using Tax-Loss Harvesting to Improve Investment Returns. In Investopedia. Investopedia. Retrieved on May 24, 2022, from https://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp
