Tess Brown is the Budgeting VP for Expo International, a large publicly traded corporation. Ms. Brown was very upset with John Smith, a Divisional Manager, after reviewing the mid-year budget reports because Mr. Smiths department has not spent all the monies allocated for new equipment purchases, i.e. computers, copiers, etc. Mr. Smith indicated that his department did not need new equipment at this time. However, he would like to spend the money on employee training. Tess told John that it is not his job to decide how monies should be spent. In fact, Mr. Smith was reprimanded by his Supervisor because he has not spent the monies as directed. Tess told John that if he does not spend the monies as directed by the end of the third quarter, the monies will be re-allocated to Julie Davis, who is also a Divisional Manager, for equipment purchases in her department. Julie will spend the money allocated to her department as directed regardless of whether the equipment is needed. Additionally, Tess told John that his budget for next year will be significantly reduced.

Has Tess Brown violated any ethical standards? Please explain.

If you were Mr. Smith, what would you do? Why?

What changes should Expo International make to improve resource allocation within the organization?