Facts
This case presents a compelling argument about the importance of maintaining good corporate practices in the business sector. Computer Associates is facing a difficult economic situation due to the flaws in the management. High profile executives like Stephen Richards utilize foul accounting practices to augment the company’s sales values and to improve its performance in the public traded stocks. For instance, the company employees manipulate the sales dates by calculating returns from different fiscal quarters. Additionally, the internal audit committee fails to reveal the nature of their financial inadequacies upon the first audit. By violating the Generally Accepted Accounting Principles (GAAP), the company’s stock revenue has fallen by 42% upon the discovery of their accounting fraud (Soles 3). Moreover, some of the high-profile executives in the company have been charged with corporate malpractice and are serving jail sentences.
Ethical issue
Stephen Richard’s initiative to act dishonestly is the ethical issue in this case. Specifically, his dilemma was whether to misreport the accounting statements to improve the returns to the shareholders or to follow the proper channels and risk getting minimal returns to the company and its stakeholders. In both cases, he is responsible for the reputation of the enterprise and its shareholders. Therefore, following one alternative risks his moral standings and the reputation of the company. As such, it is a dilemma. This is an ethical problem as it violates the common moral principles of honesty and fairness in the business environment. Regardless of the reason behind this action, it is worth mentioning that the misrepresentation of financial statements is unethical in the corporate environment.
Norms, Principles, and Values
Societal norms condemn the prevalence of vices such as dishonesty and lack of integrity. Additionally, corporate codes are formulated to promote fairness in business. Computer Associates lacks transparency to its shareholders. Specifically, it does not inform them of the true state of affairs in the company. Stephen Richard lacks integrity as he does not promote effective values in his business.
Alternatives
Best action in line norms, principles and values?
The most powerful approach to prevent the occurrence of this issue is to enforce strict audit measures. This option is in line with the societal and corporate norms as it will prevent the employees from engaging in corporate malpractices. Additionally, this approach would enhance the level of integrity within the firm thereby making its operations more transparent and ethical.
Consequences of each action
Going public about the state of affairs in the company would lead to immense losses in the stock market. This situation is largely accredited to the fact that the shareholders would disassociate themselves from the group for the fear of losing their investments. Enforcing strict audit measures would deter the employees from altering the accounting statements for their personal benefits and the company’s welfare.
Decision
Computer Associates should apply strict audit measures to prevent the reoccurrence of such an event. This approach would deter the employees from utilizing uncouth measures to enhance the licensing sales of the company. Additionally, it would augment the level of responsibility among the executives thereby fostering fair play in their transactions.
Works Cited
Soltes, Eugene F. "A Letter from Prison." (2009).
