Question

Robin, a middle management employee at a large, publicly traded company, becomes aware of accounting irregularities in financial reports (which are used internally and which also form the basis for the required filings with the Securities and Exchange Commission, as well as local and state regulators) submitted by his boss, Brooke, which suggest that Brooke has diverted $10,000.00 to the company's sustainability initiative rather than distributing the funds to the purchasing department budget as intended. The sustainability initiative has facilitated major improvements in local water quality standards and, as a result, the overall health of the community has markedly increased, at a sizeable savings of medical costs (approximately $50,000.00 in medical savings.)
Required:
What should Robin do?

Answer 1

Answer:

From a strict ethical point of view, Robin has the responsibility to report Brooke for the misappropriation of funds to the Sustainability Initiative as irregularities in financial reports can land the company into serious trouble with regulators.

Continuing further, Robin can report this issue to the company's compliance department or Human resource officer or whoever else is delegated with dealing with such scenarios.

Before Robin does this however, he should properly think about it using some ethical theories such as Utilitarianism. Under this theory, the end results are all that matters. Is Brookes helping by diverting funds, evidence suggests that Brooke is because the initiative has improved the lives of the community.

However, the money that was to go to the Purchasing department would have led to more inventory being purchased and the company therefore making more sales. Brooke's actions could therefore be hurting the company.

Robin should weigh this as well the potential problems the company could get into by submitting irregular statements against the positive effects of Brooke's actions. If Robin decides that the good of the company comes before the good of the community, he should report to the relevant officer. If not, Robin can keep quiet and hope that the regulators show leniency when the irregularities are discovered based on the positive effects it brought.