- There are two different parts of organizations are there, profit organizations and not for profit organizations (Collier, 2009). There are certain regulations that both of these organizations should comply and meet accordingly, in order to sustain in the industry for a long span of time. In this scenario, it is found that HOHO organization is about to breach the rule of expensing 25% of their donation rule. By recording the TV cost as their program cost which will also nullify the donation of the XYZ Ltd. As a financial controller of XYZ, a bold step should be taken, which is to arise and open the eyes of the upper management and tells them all the situation and breaching of contract and regulations that may pose threat for XYZ. If XYZ unable to prove that the amount they given on the name of charity is not going in the right hands, then they are unable to get tax levy on it. It will be a complete loss for XYZ both from financial aspects and strategic aspects, therefore, the management of the company should analyze that weather they want to go with the HOHO or not.
- Stakeholders have been divided and categorized into internal stakeholders, and external stakeholders and they are the most important people for the sake of the organization. There are six stakeholders who will be the effect from this whole scenario of XYZ and HOHO that are as follows
Internal Stakeholders External Stakeholders
- Managers Locality
- Directors Pressure Groups
- Shareholders Customers
- Business Ethics and corporate social responsibilities (CSR) are some of the pre-requisite for the organization, and entities are required to comply with all the regulations which are impose on them in order to smoothly run the operations of their going concern (Collier, 2009). The essence of ethics and CSR would have been applied on both profit organization and not for profit organization, and there are certain aspects related to the aforementioned scenario. The relevant ethical issues which have been associated with this scenario are the breaching of expense ratio stance and creating a problem for the management of the company. This scenario associated with HOHO. What the accountant of HOHO is doing by recording the expense in the TV program activities in their financial is totally ineffective and unethical that may affect their future belongings with the donations
- The consequences of each of the scenarios are as follows
Doing Nothing: It means the financial controller is not logical and serious with the organization because it is a serious breach of contract that may affect the financial and strategic position of XYZ as well
Telling your organization about the situation: It is a good idea to furnish all the pros and cons of this scenario with the management and tell them HOHO is breaching the contract
Encourage working with HOHO: There is only one situation in which it is possible which is to discuss this breaching with the management of HOHO and tell them to control this problem accordingly
Reference
Collier, P. (2009). Fundamentals of risk management for accountants and managers. 1st ed. Amsterdam: Elsevier/Butterworth-Heinemann.
