Business Accounting (Gbb/Gcb 1013)

Topics: Balance sheet, Charitable organization, Asset Pages: 9 (2443 words) Published: March 20, 2013
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Charitable organizations are NGOs whose purpose of existence is to benefit the public. The mission of a charitable non-profit expresses the particular way in which the organization will fulfil its public benefit purpose. The board members of a non-profit organization entrusted with the supervision of the board members who have a legal obligation to ensure that the non-profit organization uses the funds to fulfil its mission.

Better Days Ahead, a charitable organization, has a standing agreement with First National Bank. The agreement allows Better Days Ahead to overdraw its cash balance at the bank when donations are running low. In the past, Better Days Ahead managed funds wisely, and rarely used this privilege. Jacob Henson has recently become the president of Better Days. To expand operations, Henson acquired office equipment and spent large amounts on fundraising. During Henson’s presidency, Better Days Ahead has maintained a negative bank balance of approximately $10,000. 1. - What is the ethical issue in the situation?

The issue in this situation is the investment policy. Managers of non-profit organizations must ensure that investments are consistent with the values and principles set to achieve the stated objectives to guide activities, and ethical behaviour of its employees, volunteers and board members. The lack of an ethical base as a result of the lack of creation and monitoring of ethical standards has the potential to lead to a lack of success in the organization. However the fulfilment of the ethical standards of the institution by the leader and employees, since success is reflected in the work to be carried out, ensuring the objectives and goals to reach. Better Days Ahead, as a charitable organization, it is not normal to maintain a negative bank account as it has no benefits arise from its operations, but since the president of the organization is carrying out his work according to the duties of his job and the agreements with the bank, then it is acting properly and not against any ethics or agreements.

2. State why you approve or disapprove of Henson’s management of Better Days Ahead’s funds. I would approve of his management of the fund as he is taking out a loan in order to improve the fundraising ability of his charitable organization. Since any charity relies on fundraising in order to increase their operating funds and potential, the usage of a loan during a "slow time" in order to increase this fundraising potential of the organization seems to outweigh the impact that the negative bank balance might show due to the loan. Certain company have to do this in order to maintain current condition. What has been done by Better Days Ahead is good to their company and will benefit them more.

As the conclusion, we can see from above statement, there are still many ways to improve the productivity of the company although the company is doing charitable work. As a manager or even worker, they have to implement the way of ethics in doing business of work. Some of the company already implement company policy to smoothing the way of work. To disregard company policy is unethical because it has the potential to harm the company and other employees. To me, unethical behaviours can damage a company's credibility, causing the business to lose customers and ultimately shut down. However, business owners and their management teams can work with employees to prevent unethical behaviours. In this case, the situation that they are facing is still ethical as they have to maintain their current status as charitable company.


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