Case Study #10 – Phantom Expenses
The ethical issues presented in this case are dealing with employees not being honest with their employer. The sale reps of the company were reporting fictitious expenses because the company does not require them to turn in any receipts. Since they do not require receipts, the employees took it upon themselves to add 25% when they filled out their expense vouchers, instead of being honest. The employees stated, “The Company did not really need the money because it was very profitable.” Therefore, the employees were not being honest and in return, they were receiving more profit than they should have. Ann did not want Jane to report the correct expenses, which was unethical. Jane should have followed her initial thought, which was to report the fictitious expenses to someone of a higher authority. Even though Ann may have not been happy about Jane going to authorities higher than her, others in the company would have shown gratitude to Jane for being honest and doing the right thing. Jane and the company could have to deal with several consequences for not reporting the right expenses. Jane could lose her job for not reporting what she knew about others being dishonest and if she followed the example of others in the company who were reporting higher amounts than they should have, both Jane and Ann could lose their jobs along with others in the company. Loyalty and integrity are two ethical principles that would be useful in this specific case. By reporting the fictitious expenses of Ann and others, Jane would maintain personal integrity by doing the right thing and would earn the trust of others. Being loyal to the company that Jane is working for would also be a good ethical principle that would be useful here. By reporting these things, Jane would be loyal to her organization and gain trust of others in this way as well.
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