James Everhart
ACC 604.02 Fall 2012
Ethics Assignment
10/10/2012
Pamela is faced with the dilemma of deciding between potentially saving the company
$300,000 per year or saving people’s jobs. Specifically, Pamela must decide whether or not
she should correct mistakes in a report prepared by her assistant controller. The purpose of
the report is to help key stakeholders decide between two alternatives for supplying the
company’s telecommunications needs. The assistant controller overlooked some avoidable
fixed costs of operating the company’s telecom division. Fixed costs are defined as
expenses that do not change as a function of the activity of a business. By including these
costs, the company would save $300,000 per year by going with the proposal to outsource
the telecom division. Outsourcing though would cause the elimination of the
telecommunication department and several jobs.
The first primary stakeholder group that would have stake in Pamela’s decision is the
executive management team at Murray Manufacturing. Decisions at this level impact the
entire wellbeing and workforce of a company. Faced with a decision between two
alternatives, the management team is reliant on the information in Pamela’s report to
determine the best action for meeting business objectives. The management team would
likely have internal controls that require Pamela to include the fixed costs and deliver a
clear and accurate report.
The second primary stakeholder group would be the telecommunications department at
Murray manufacturing. Potentially the department and its jobs could be eliminated based
on the findings in Pamela’s report. The workers would consider their jobs and livelihoods
much more important than saving $300,000.
The third stakeholder group would be the company’s shareholders. Typically interests of
shareholders are equated with business profitability and share price. The average
shareholder is not typically involved in the day-to-day operations of the company,
therefore they are reliant on several parties to protect and further his or her interests. These
parties include the company’s employees, its executives and its board of directors. Pamela
as an executive has a duty to report accurate information in order to protect shareholder
interests.
The final primary stakeholder I would like to reference is Pamela herself. At Pamela’s
level it is imperative that management have confidence in the integrity of the information
she provides. If it was discovered Pamela presented false information it would seriously
damage the executives trust in Pamela. This consequence could be career ending for
Pamela.
One course of action that Pamela could take is fixing the errors in the report to include the
