Page 2 - Ethical Analysis Evaluate the scenario provided on the next page. Answer these questions based on your analysis: 1. Do you think Greg is an ethical and honest person? What evidence in the scenario supports your opinion of him? 2. How does the fraud triangle help us to understand Greg's behavior? Relate each of the components of the triangle to Greg's words or actions. 3. How do the circumstances of the scenario pose a threat to the corporation's cash - the threat that it will pay out cash inappropriately? And how does the scenario pose a threat to the integrity of the company's financial reports? 4. Name 1 or 2 internal control procedures that could be implemented to reduce the opportunity for Greg to succeed in pressuring you to commit fraud? 5. If the current sales goal is "achieved" fraudulently, but is not discovered, Greg and your team will still experience undesirable consequences next year. Describe at least 1 of these consequences. 6. Think about how you, as the accountant, would be feeling after your last encounter with Greg. How does the fraud triangle help you to evaluate your predicament? Relate each of the components of the triangle in describing your situation. How can you use your knowledge of the fraud triangle to determine an appropriate course of action for yourself? How far would you be willing to go to keep from sacrificing your personal and professional integrity? 7. Create a conclusion to the story: Write a paragraph describing what you would do to end the scenario appropriately. Can you suggest a way that the sales goal might be achieved legitimately? SAMPLE SCENARIO: This is a fictitious scenario, but it is based on factual events that have occurred in actual businesses. You are an accounting manager in the Southeastern Division of a large corporation. The upper management of your organization sets an aggressive sales goal for your division in the new year. Your division manager, Greg, will receive an end-of-the-year bonus only if the sales goal is achieved. He begins by meeting with the marketing and sales managers and launching an aggressive sales campaign. He believes the goal is overly ambitious, but he is optimistic about his chances of achievement. As the year progresses, you work diligently to provide frequent, accurate updated sales projections. The latest projections indicate that this year's sales have increased significantly over last year, but the goal assigned to your division may not be reached before December 31. Greg is not happy with your report. He releases his frustration and starts yelling at you. "Your numbers cannot be right!" He demands that you go back to the spreadsheets and calculate again. "\#@!"?!! I am working my @\$ off, here, and nobody in sales has had a day off in months. Why are you working against us? You had better start acting like a part of the team and do your part to help us meet this goal. And mark my word - I had better not miss out on my bonus because you don't know how to report the numbers!" Speechless, you leave Greg's office and start rechecking the figures. You are convinced that your projection is accurate. It is November, and you begin to worry that you will lose your job if things don't improve before the end of the year. In the days that follow, you do your best to avoid running into Greg because you do not want to deal with any more confrontations. One Friday evening, you are at your desk pouring over the numbers one more time before going home. The sales manager, Tina, stops by your office, closes the door, and sits in the chair across from your desk. Her face shows that she is as stressed as you are. She confides that she, too, is feeling the heat from Greg and that she fears losing her job if the sales goal is not met. "I have done everything humanly possible to encourage our customers to buy more product at premium prices. We all knew from the beginning that the sales goal was pretty high, and it is amazing that we got this close. Tell me exactly what it would take to get Greg off our backs and our heads off the chopping block." You and Tina start reviewing and discussing everything together. Tina has received a large order from a long-time customer, but the customer cannot accept delivery until the second week of January. You rework the numbers and tell Tina, "If only the customer could take delivery before January 1st, we could reach the goal - just barely." But it is a very large order, and Tina says the customer is adamant that delivery must not be made early. Tina must have shared your discussion with Greg because he comes to you on Monday afternoon to discuss that large order. "Hey! I heard that you found the solution to meeting our sales goal! Good job!!" "Well," you explain, "I made the . observation that IF our customer could take delivery of that large order before the end of the year, we could meet the sales goal. We are that close. But Tina says the customer just cannot do it." Greg is not giving up. "That's just a matter of semantics," he says. "We can date the invoice December 31 and include it in this year's sales. Then, we can deliver the goods in January, when the customer is ready. The customer never said we couldn't bill him early. Right? It's only a few days and one order. No one will ever know the difference. If the customer says anything about the invoice date, we'll say it was an error and make a correction, but that will be next year, anyway. Problem solved!!" Greg bounces out of your office