You need to analyze the possible options available to the decision maker with the ethical dilemma, using the following template/outline. The template should look familiar, since it is parallel to the analysis process you used on your paper.

Template/outline (for use after you have identified thedecision-makerwho has an ethical dilemma)

• Clearly describe theethical dilemma.
• Describewhat the decision-maker did, and the Kohlberg stage and the positive and negative consequences that arose or may have arisen from that choice
• Identify 2 additionalpossiblecourses of actionthat could have been taken, and the Kohlberg stage that would lead to that choice.
• Under each choice, bullet thepositiveandnegativeconsequences for the individual, the company and the relevant stakeholders.

For example, ifa client asked Ms CPA to hide income on a tax return, for instance, and Ms CPA's boss also wanted her to do it, she would have an ethical dilemma: break the rules or disobey the boss.

• Ethical dilemma: does she comply with her fiduciary responsibility to follow the law, or does she do what the client and her boss want her to do, which violates ethical principles?
• What Ms. CPA did: She told herboss that she did not feel comfortable committing this fraud; she said she would not be able to do it as a licensed CPA. She then asked her boss if this is typical of the way business is done in this firm.
• This was Kohlberg stage four (law abiding)
• Positive consequences:
• Ms CPA had respect for herself, and she would not face professional or legal censure.
• her boss would know that she was a person of integrity
• even if she did lose my job over this, that would be better in the long run than a lifetime of fraudulent transactions that could lead to incarceration and loss of license
• the client would be confident that the firm had his best interests at heart--especially if there were legal alternatives presented
• Negative consequences that may have occurred:
• her boss may have been temporarily be angry with her, and talking to him would have been difficult.
• This might affect the kinds of client assignments she would get in the future.
• there is an outside chance that she might have lost her job, and she would have faced the loss of income
• the firm might have lost that client.
• A different possible course of action:Do what the client (and boss) wants. This would be a combination of Kohlberg stage two (doing an action to get paid or keep a job) or stage three (trying to look good to boss or client by complying)
• Positives: client and boss will be happy; Ms CPA will not have to worry about job loss for insubordination; difficult discussion with boss could be avoided.
• Negatives: Ms. CPA cannot live with the guilt of breaking the law; boss pushes Ms. CPA to do even worse things in the future; eventually Ms. CPA is indicted; client gets caught and blames the CPA firm
• A second possible course of action: Realize that working for this firm is not a good "fit" ethically, Ms. CPA quits. This could be Kohlberg stage 2: (taking care of herself, and taking the consequences of loss of employment) or it could be Stage 4/stage 5 (following the rules of society even if one has to experience personal difficulties)
• Positives: Ms. CPA feels ethically good about herself; client and boss have the chance to fact the fact that they might not be doing the right thing; law is not broken and third-party stakeholders do not suffer bad consequences
• Negatives: Ms. CPA must face the loss of income; client and firm might just continue with their deception.

AJE whistleblowing caseAnalyze the following case using the template described above.Ms. TB is the "decision maker" with the ethical dilemma of how to proceed when she realizes that a material, fraudulent adjusting journal entry has been made, and that CFO and Board refuse to correct the error.

AJE Case:

About 14 years ago, while investigating the end of the year financial statements at SMC, Ms TB ( as part of her role of Chief Negotiator for the faculty union), discovered some adjusting journal entries in the hundreds of thousands of dollars, moving faculty salaries from one account to another.

She asked to see the paperwork supporting the entries, which contained no explanation and were not signed by anyone.

She asked the Controller that reported to the CFO what was going on, and it was pretty obvious (though unspoken) that the Controller had let Ms TB see the unadjusted as well as the adjusted general ledgers so that Ms TB would discover the huge journal entries that had been made without a written trail of approval.

The adjustments directly affected the calculation of the "50% law," which requires that, after adjustments, 50% of the state money paid to community colleges has to be spent on instruction (as opposed to administration or gardening).This is a major compliance item for state reporting and as part of the official annual audit.

Before the AJE adjustments, the College was NOT in compliance; after the adjustments, the College APPEARED TO BE in compliance...but the original postings had been proper.The Adjusting Journal Entries were completely unjustifiable: their intent was to fraudulently misrepresent that the College was spending at least 50% on instruction, when in fact they were spending less.

Long story shortit turns out that CFOs in community colleges all over CA were deliberately miscalculating this number.In a hearing in Sacramento, lawyers for the Community College League testified that this was a law that was "not meant to be followed." Both Republicans and Democrats were outraged that college administrators were picking and choosing what state laws they would comply with, so A Bureau of State Auditors(Links to an external site.)

(BSA) audit was therefore commissioned.

The BSA originally audited 3 districts, but expanded it to 10 when they found problems, and issued Report 2000-103:

Oversight by the Chancellor's Office Allows Districts to Incorrectly Report Their Level of Spending on Instructor Salaries(Links to an external site.)

Finding 1:" Six of 10 districts did not meet the 50 percent threshold for spending on instructor salaries despite having reported compliance with the law."

Finding 2: "We estimate that, in total, the six districts spent $10 million too little on instructor salaries."

Extrapolated, this was a $100 million annual problem.