Royal Suites operates a regional hotel chain. Each hotel is operated by a manager and an assistant manager. Many of the staff who runs the front desk, clean the rooms, and prepare breakfast buffet work part-time or have a second job, so turnover is high. Assistant manager Linda asked the new bookkeeper to help prepare the hotels master budget. The master budget is prepared once a year and submitted to company headquarter for approval. Once approved, the master budget is used to evaluate the hotels performance. These performance evaluations affect hotel managers bonuses; they also affect company decisions about which hotel deserve extra funds for fixed assets improvements.

When the budget was almost complete, Linda asked the bookkeeper to increase amounts budgeted for labor and supplies by 15%. When asked why, Linda responded that hotel manager Malik told her to do this when she began working at the hotel. Malik explained that this budgetary cushion gave him flexibility in running the hotel. For example, because company headquarters tightly controls funds for fixed assets improvement, Malik can use the extra money budgeted for labor and supplies to replace broken televisions or to pay bonuses to keep valued employees. Linda initially accepted this explanation because she had observed similar behavior at her previous place employment.

Required:

Put yourself in Lindas position in deciding how to deal with the situation.

1. Describes is the ethical issue facing by Linda.
2. List and explain the options that Linda can take.
3. Explain the possible consequences with the options in (b).
4. What is the best options should Linda choose? Recommend.