ASSIGNMENT 1[50 MARKS]

Complete the following statements. Next to the corresponding number write the appropriate word(s) in your answer booklet.

QUESTION 1(10x2=20)

a)............................................. require others to for bear acting in certain ways to allow the bearer of that right to act without impediment.

b)..................................... is the combined effects of increased concentration, cyclic crises, rising unemployment and declining relative compensation.

c)The combination of inflation and unemployment, or ............................................., is problematic for Keynes' views.

d)According to the ........................................... criterion of justice, benefits and burdens are distributed when a person receives in return at least the value of the contribution he/she made to the enterprise.

e)....................................................... describes the state of a person who is wrongfully separated from something which he should be united, or who is dominated by something of his own making.

f)...................................................... consists of being prepared to render a moral account of an action done either for ourselves or as agents for other.

g).................................................... maintain that the actions are morally right or wrong dependent of their consequences.

h)As a ..................................................... of his/her employer, the manager has a duty to serve the employer as the employer would want to be served.

i)The ............................................... demonstrates that even if people were motivated, by self-interest alone, they would still have a good reason to be ethical in business.

j)A .................................................. places high value on individual effort and the belief that hard work does and should lead to success.

QUESTION 2 (15 Marks)

The Case of the Collapsed Mine

In a town in West Virginia, miners were digging coal in a tunnel thousands of feet below the surface. Some gas build-up had been detected during the two preceding days, and the director of safety had reported it to the mine manager. The build-up was sufficiently serious to have temporally stopped operations until it was cleared. The manager of the mine decided that the build-up was only marginally dangerous, that he had coal orders to fill, that he could not afford to close down the mine, and that he would take the chance that the gas would dissipate before it exploded. He told the director of safety not to say anything about the danger. Two days later, the gas exploded. One section of the tunnel collapsed, killing three miners and trapping eight others in a pocket. The rest managed to escape.

The explosion was one of great force, and the extent of the tunnel's collapse was considerable. The cost of reaching the men in time to save their lives would amount to several million dollars. The problem facing the manager was whether the expenditure of such a large sum was worth it. What, after all, was a human life worth? Who should make the decision, and how should it be made? Did the manager owe more to the stakeholders of the corporation or to the trapped workers? Should he use the slower, safer, cheaper way of reaching them and save a large sum of money, or the faster, more dangerous, more expensive way, and possibly save their lives.

He decided on the latter way and asked for volunteers. Two dozen of men volunteered. After three days, the operation proved to be more difficult than anyone had anticipated. There had been two more explosions, and three of those involved in the rescue operation had already been killed. In the meantime, telephone contact had been made with the trapped men, who had been fortunate enough to find a telephone line that was still functioning. They were starving. Having previously read about a similar case, they decided that the only way for them to survive long enough for any of them to be saved was to draw lots, and kill and eat the one who drew the shortest straw. They felt it was their duty that at least some of them be found alive; otherwise, the three who had died rescuing them would have died in vain.

After 20 days, seven men were finally rescued, alive; they had cannibalised their fellow miner. The director of safety, who had detected the gas before the explosion, informed the newspaper of his report. The manager was charged with criminal negligence, but before giving up his position, he fired the director of safety. The mine eventually resumed operation.

a)Discuss the ethical course of action that all parties in the case should have considered with specific focus on steps that would have constituted ethical behaviour. (10)

b)In your view, what action did the director of safety take to make it morally justifiable?(5)

QUESTION 3

An Auditor's Dilemma

Sorting through a stack of invoices, Alison Lloyd's attention was drawn to one from Ace Glass Company. Her responsibility as the new internal auditor for Gem Packing was to verify all expenditures, and she knew that Ace had already been paid for the June delivery of the jars that are used for Gem's jams and jellies. On closer inspection, she noticed that the invoice was for deliveries in July and August that had not yet been made. Today was only June 10. Alison recalled approving several other invoices lately that seemed to be misdated, but the amounts were small compared with the $130,000 that Gem spends each month for glass jars. ''I had better check this out with purchasing," she thought.

Over lunch, Greg Berg, the head of purchasing, explained the system to her. The jam and jelly division operates under an incentive plan whereby the division manager and the heads of the four main units--sales, production, distribution and purchasingReceive substantial bonuses for meeting the quota in pretax profits for the fiscal year, which ends on June 30. The bonuses are about one-half of the annual salary and constitute one-third of the managers' total compensation. In addition, meeting quota is weighted heavily in evaluations, and missing even once is considered to be a death blow to the career of an aspiring executive at Gem. So the pressure on these managers is intense. On the other hand, there is nothing to be gained from exceeding the quota. An exceptionally good year is likely to be rewarded with an even higher quota te next year because quotas are generally set at corporate head-quarters by adding 5 percent to the previous year's results.

Greg continued to explain that several years ago, after the quota had been safely met, the jam and jelly division began prepaying as many expenses as possiblenot only for glass jars but for advertising costs, trucking charges, and some commodities, such as sugar. The practice has continued to grow, and sales also help out by delaying orders until the next fiscal year or by falsifying delivery dates when a shipment has already gone out. "Regular suppliers like Ace

Glass knows how we work," Greg said, "and they send the invoices for July and August at my request." He predicts that Alison will begin seeing more irregular invoices as the fiscal year winds down. "Making quota gets easier each year," Greg observed, "because the division gets an ever-increasing head start, but the problem of finding ways to avoid going too far over quota has become a real nightmare." Greg is not sure, but he thinks that other divisions are doing the same thing. "I don't think corporate has caught on yet, "he said, "but they created the system, and they've been happy with the results so far. If they're too dumb to figure out how we're achieving them, that's their problem.

Alison recalled that upon becoming a member of the Institute of Internal Auditors, she agreed to abide by the IIA code of ethics. This code requires members to exercise "honesty, objectivity, and diligence" in the performance of their duties but also to be loyal to the employer. However, loyalty does not include being a party to any "illegal or improper activity." As an internal auditor, she is also responsible for evaluating the adequacy of the effectiveness of the company's system of financial control. But what is the harm of shuffling a little paper around? She thinks. Nobody is getting hurt, and it all works in the end.

3.Explain the ethical principles by means of examples cited from the case. (15)