Question 3

Penny is chief accountant at kitchenware retailer Hut Ltd and has been in this role for around 5 years. Penny feels secure in her job and has recently purchased a new home, taking out a significant mortgage. Hut Ltd. has a June 30 year end and Penny is finalising the year end accounts.

In finalising the inventory valuation Penny has a discussion with the warehouse clerk. During the conversation, Penny is made aware of the existence of a large amount of slow moving stock. A closer inspection of the stock reveals that it is two years old and would normally have been written down months ago if regular inventory management policies had been followed. Penny is curious and so decides to follow up the issue of the stock valuation with the managing director, Anne Redmond. It is well known within the company that Anne is also a major shareholder of Hut Ltd. Penny is suspicious that Anne may have given a directive to defer any inventory write downs. Anne tells Penny that there is no need to write down the stock in the year end accounts. Penny suspects, however, that Anne wants the balance sheet to carry overpriced stock values because she wants to sell Hut Ltd on terms advantageous to the shareholders. Anne tells Penny that she is aware of a potential buyer who is looking to inject capital into the business and that if the sale proceeds then all employees will hold onto their jobs and that Penny will receive a substantial pay increase.

Required:

a) Define the normative ethical perspectives of teleology and deontology.

b) From an ethical egoist perspective, what would be an appropriate course of action for Penny? Justify your choice.

c) Would your answer to b) be different if Penny pursued 'utilitarianism'? Justify your position.

d) Advise Penny of an appropriate course of action from a deontological ethical perspective. Outline why it is based on deontological ethics.

e) Which ethical theory do you think leads to the most appropriate course of action for Penny? Justify your position.