Chapter8&9-Internal Control-WPS Office

CHAPTER 8 & 9
ETHICAL DILEMMA
and
ADVOCACY AGAINST
CORRUPTION
Presented by: Lumbres, Emelyn M.

BSA III
ETHICAL DILEMMA
ETHICAL DILEMMA
is a situation a person faces in

which a decision must be made
about approptiate behavior
Six Step Approach to resolve Ethical Dilemma
1. Obtain the relevant facts.

2. Identify the ethical issues from the facts.
3. Determine who is affected by the outcome of
dilemma and how each person or group affected.
4. Identify the alternatives available to the person
who must resolve the dilemma.
5. Identify the likely consequences of each
alternatives.
6. Decide the appropriate action.
Illustrative Case: Resolving an Ethical Dilemma
Bert Cruz has been working for 6 months as a staff assistant for a
law firm, Alvendia and Castro. Currently he is assigned to the case
of Ryan Manufacturing Company under the supervision of Carlos
Reyes, an experienced senior lawyer. There are three junior legal
assistants assigned to the case, including Bert Cruz and more
experienced assistant, Martha Sy.
During lunch on the first day, Carlos says, " It will be necessary for
us to work a few extra hours on our own time to make sure we
come in on budget. This case isn't very profitable anyway, and we
don't want to hurt our firm by going over budget.
We can accomplish this easily by coming in a half early, taking a
short lunch break, and working an hour or so after quitting time.
We just won't write that time down on ourtime report."
Bert recalls reading in the firms policy manual that
working hours and not charging for them on the time
report is a violation of Alvendia and Castro employment
policy. He also knows that seniors are paid bonuses.
Later, when discussing the issue with Martha, she says,
"Carlos does this on all of his job. He is likely to be our
firm's next manager. The partners think he is great
because his job always come in under bugdet. He
rewards us by giving us good engagement evaluations,
especially under the cooperative attitude category.
Several of the other seniors staff follow the same
practice.
ETHICAL
ISSUE
The ethical issue in this situation is no diffucult to find.
 Is it ethical for Bert to work hours and not them as

hours worked in this situation?
What is affected and How is each affected?
The following are the key persons involved in this situation:
WHO HOW AFFECTED

 BERT  Being ask to violate firm policy.
 Hours of work will be affected.
 Pay will be affected.
 Performance evaluation may be
affected.
 Attitude about firm may be
affected.
 MARTHA  Same as Bert

WHO HOW AFFECTED
 CARLOS  Succes in engagement and in

firm may be affected.
 Alvendia  Stated firm policy is being

violated.
and Castro  May result in under billing client
in the current and future
engagements.
 May affect the firm's ability to
realistically budget
engagements and bill clients
 May affect the firm's ability to
motivate and retain employees.
WHO HOW AFFECTED
 Staff assigned to Ryan  May result in unrealistic time

Manufacturing in the budget
 May result in unfavorable time
future performance evaluations.
 May result in pressures to
continue process of not
charging for hours of work.
 Other Staff  Following the practice of this

in firm engagement may motivate
others to follow the same
practice on other engagement.
BERT'S AVAILABLE ALTERNATIVES:
• Refuse to work the additional hours

• Perform in he manner requested.
• Inform Carlos that he will not work the additional
hours or will change the additional hours to the
engagement.
• Talk to manager or partner about Carlos request
• Quit working for the firm
Each of these options includes a potential consequence, the worst

likely one being termination by the firm.
CONSEQUENCES OF EACH ALTERNATIVES
Consider the following similar ethical dilemma Bert might face in his
career as he advances:
 A supervisor ask Bert to work 3 unreported hours daily and 15
unreported hours each weekend.
 A supervisor ask Bert to initial certain procedures as having been
performed when they were not.
 Bert concludes that he cannot be promoted to manager unless
he persuades assistant to work hours that they do not record.
 Management informs Bert, who is now a partner, taht either the
company gets a 400,000 legal fee or the company will change
lawyers.
 Management informs Bert that the legal fee will be increased
50,000 if Bert can find a plaussible way to increse probability or
win the case.
APPROPRIATE ACTION
Only Bert can decide the appropriate action to select in

the circumstances after considering his ethical values
and the likely consequences of each action. At one
extreme, Bert could decide that the only relevant
consequence is the potential impact on his career. Most
of us would conclude that Bert is an unethical person if
he follows the course. At the other extreme, Bert can
decide to refuse to work for a firm that permits even
one supervisor to violate firms policy. Many people
would consider such an extreme reaction naive.
ADVOCACY AGAINST
CORRUPTION
CORRUPTION
 Is the abuse of Private and Public office for personal gain.

It includes act of bribery, embezzlement, nepotism,
kickbacks and state capture.
 Is the misuse of entrusted power ( by heritage, education,
marriage, election, appointment) for private gain. It covers
not only the politician and the public servant but also the
CEO, CFO and other employees of a company.
HOW DOES CORRUPTION LOOK LIKE?
CORRUPTION MAY TAKE PLACE IN ANY OF THE
FOLLOWING FORMS AND WAY:
 A company paying a bribe to win the public contract to build the local
highway, despite proposing a sub-standard offer.
 A politician redirecting investment to his hometown rather than to
the region most in need.
 Public official embezzling funds for school renovation to build his
private villa.
 A private company manager recruiting an ill-suited friend for a high
level position.
 Or, local officials demanding bribes from ordinary citizens to get
access to a new water pipes.
 A salesman bribing the purchasing manager of a company to give
preference to his products.
WHY AND HOW DOES A PERSON BECOME CORRUPT?
Corruption spread when there are opportunities, when

risk is minimal in comparison to benefits obtained or
when one are confronted with issues like:
 Career Advancement
 Earning of more income
 Financial problems caused by illness, loss of property,
etc.
CHARACTERISTICS OF CORRUPTION
a. Recipients and Payers

b. Extortion
c. Lubricant of Society
d. An Ethical Dilemma
e. Poverty Alleviation
f. Culture
g. 'Kindness among friends'
THE PHILIPPINES CORRUPTION REPORT
The former secretry of finance reported in 2016

that the Philippines losses 200 billion from
smuggling and 400 billion for tax evasion
perpetuated through collusion with some
personalities in the government agencies. 2.6
Trillion is lost annually in corruption globally.
JUDICIAL SYSTEM
Corruption risk are high in the judicial system. Bribes and

irregular payments return for favorable judicial decisions
are common.
The judiciary are underfunded by the state and often

depends on local sponsors for resources and salaries,
resulting in non-transparent and biased court decission.
PUBLIC SERVICE
Companies contend with a high corruption risk when

dealing with the public services. Approximately half of
business executives reported being ask for a bribe by
someone in the government in 2017. Nearly 3 out of 5
businesses reported expecting to give gifts in order ' to
get things done' but only one in ten reported expecting
to give gifts to get an operating license.
TAX
ADMINISTRATION
There is a high risk of corruption when dealing with the

tax administration. Around one to seven companies
indicate they expect to give gifts at meetings with tax
officials.
CUSTOMS
ADMINISTRATION
There is a high risk of encountering corruption when

dealing with the customs. About a quarter of
companies indicate they expect to give gifts when
obtaining an import license.
PUBLIC
PROCUREMENT
There is a high risk of corruption in public procurement

sector which is subject to rampant corruption,
irregularities, and inconsistent implementation of
legislation.

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CHAPTER 8 & 9

Presented by: Lumbres, Emelyn M.

is a situation a person faces in

1. Obtain the relevant facts.

The ethical issue in this situation is no diffucult to find.

 Is it ethical for Bert to work hours and not them as

The following are the key persons involved in this situation:

WHO HOW AFFECTED

 MARTHA  Same as Bert

 CARLOS  Succes in engagement and in

 Alvendia  Stated firm policy is being

 Staff assigned to Ryan  May result in unrealistic time

 Other Staff  Following the practice of this

• Refuse to work the additional hours

Each of these options includes a potential consequence, the worst

Only Bert can decide the appropriate action to select in

 Is the abuse of Private and Public office for personal gain.

Corruption spread when there are opportunities, when

a. Recipients and Payers

The former secretry of finance reported in 2016

Corruption risk are high in the judicial system. Bribes and

The judiciary are underfunded by the state and often

Companies contend with a high corruption risk when

There is a high risk of corruption when dealing with the

There is a high risk of encountering corruption when

There is a high risk of corruption in public procurement

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