Controllership in Accounting

Topic: Violations of Internal Control

Michael has been recently hired as the Distribution Supervisor for an international candy

company. The plant is in a rural area and is about to begin a major expansion that will triple

its capacity. The company has generous benefits and has paid all moving expenses for Michael

and his family. During the move, however, the movers damaged a large piece of oak

furniture. Michael has contacted the moving company. The insurance is by the pound and

would cover only a small part of the worth of the item. Michael has explained this to the

moving company, but it refuses to reimburse him for the items value.

Michael approaches his supervisor, Richard, about the problem. Michael has been on the job about a

month and enjoys the partnership they have developed to date. Michael had originally

interviewed with Richard, and Richards recommendation had been a major factor in Michaels getting

the job. Michael has found the types of challenges he was looking for in a new position and is

already becoming a major player in planning for the new expansion.

Richard tells Michael that he does not think he can do anything to persuade the moving company to

reimburse Michael and suggests that Michael pad his next few expense reports to cover the cost.

Michael is surprised at Richards suggestion, because thus far Richard has dealt with him in a very

evenhanded manner and has appeared to have strong business ethical standards.

Answer the following questions from the case above :-

1. What are the relevant facts of the case?

2. What, if any, are the ethical issues?

3. Who are the stakeholders?

4. What are the possible alternatives including any ethical concerns?

5. What are the practical constraints?

6. What action(s) should be taken?