Facts of the Case
Fraud can be defined as an act or practice that is wrongful or criminal in nature with the intention of making unlawful gains. In this case, Aaron Beam, a certified public accountant, was engaged in the illegal alterations of the financial statements. Mr. Beam and his friend, Richard Scrushy both started a healthcare company known as Health South. Mr. Scrushy would then act as the CEO while Mr. Beam would act as the CFO. Mr. Scrushy persuaded Beam to do whatever it takes to make sure that the financial reports that he prepared for the company looked good in the eyes of the stakeholders and the investors. Mr. Beam was instructed by the CEO to move some of the startup costs to the ‘capital investment’ section from the ‘expenses’ section. He recorded the unpaid receivables under the assets section of the balance sheet. Beam first considered these moves as aggressive accounting. However, the adjusted and cover up amounts kept going higher and higher as the earnings kept on falling short of the expectations of Wall Street.
Ethical Issues
It is quite clear that Mr. Bema failed to think rationally and diligently about the consequences of his actions. His shortsightedness and ignorance led him to adjust the financial reports in order to please the CEO and the stakeholders. Beam thought he had acted in the best interest of all the stakeholders, but this was not the case because the best interest of the stakeholders is to be provided with accurate financial results upon which they can make strategic and profitable decisions both in the short term and long term (Velasquez 179).
Initially, Mr. Beam thought adjustments were small enough and that no one would notice. He had the willingness to obey both the law and his superior, but it seems that he succumbed to the influences of his friend the CEO. I think it was his professional responsibility as a certified accountant to prepare accurate financial reports even if the reports did not make the company look good in the eyes of the investors or the stakeholders.
Options
When the fraud case was opened against Mr. Beam, he pleaded guilty and quickly admitted that he should have put ethics first (Fottrell). His first choice when he was approached by the CEO to adjust the reports, he should have declined and stated that this was against his professional responsibility. He should also have forwarded the matter to the board of directors in case the CEO insisted that he commits the fraudulent activities. This was the board of directors would have taken the appropriate action that they deemed was beneficial for the long-term survival of the company.
Conclusions
Looking at the facts of the case Mr. Beam tried to cite the ‘loyal agent’ argument. But I believe this would not be valid primarily because one cannot justify good intentions with the means used. As a professional he should have conducted the activities under the law and the code of conduct that governs public accountants. Mr. Beam had the law behind his back, and it was up to him to follow the law without making any excuses such as the dictatorship of the CEO. I also think that he acted on his free will and was interested in the profits that the company would generate if more and more investors invested in the firm.
Work cited
Fottrell, Quentin. Aaron Beam: ‘I think my dog still loves me’. 29 July. 2014. Web. 15 June. 2016. < http://www.marketwatch.com/story/aaron-beam-he-fueled-the-scandal-at-healthsouth-2014-07-29 >
Velasquez, Manuel. Business Ethics: Concepts and Cases. Upper Saddle River, N.J., Pearson, 2012. Print.
