Ethical Obligations and Decision Making in Accounting, 4/e 1
Case 2-5 Gateway Hospital (a GVV case)
Troy just returned from a business trip for health-care administrators in Orlando. Kristen, a
relatively new employee who reports to him, also attended the conference. They both work for
Gateway Hospital, a for-profit hospital in the St. Louis area. The Orlando conference included
training in the newest reporting requirements in the health-care industry, networking with other
expenses, even though they were personal expenses. Her rationale was that the hospital policies
would not totally cover the business costs of the trip. Troy often has to travel and misses family
time that cannot be recovered or replaced. Troy also knows that his boss has a reputation of
signing forms without reading or careful examination. He realizes the amount involved is not
material and probably won’t be detected.
Questions
1. What are the main arguments you feel Troy will make and reasons and
rationalizations you need to address?
Troy may want to argue that it is only one night, he has been a long time employee, the
amount is not material, everyone else does the same, and that he will cover for Kristen in
Ethical Obligations and Decision Making in Accounting, 4/e 2
2. What is at stake for the key parties in this situation?
The key parties in the case are Troy, his wife, Kristen, Joyce, and the hospital. Troy has
his performance reviews and status as a supervisor at stake. He and his wife also have at
stake the reimbursement of expenses (in the short-term the expenses may seem high, but
3. What levers can you use to influence how Troy reacts to your position in this
matter?
Kristen should appeal to Troy to be honest and fair to all concerned by paying his own
personal expenses from the trip. Kristen should emphasize that at this point no harm will
likely come to Troy if he steps forward and explains to Joyce that he made a mistake
4. What is your most powerful and persuasive response to the reasons and
rationalizations you need to address? To whom should the argument be made?
When and in what context?
Kristen should appeal to Troy not to have the matter to go higher in accounting
department or be reported to the president. She should mention that although he is a long
time employee that does not entitle him to steal from the hospital by using the company’s
reimbursement procedures to mask personal expenses. If the amount is immaterial as
Ethical Obligations and Decision Making in Accounting, 4/e 3
Kristen needs to be prepared to rebut the loyalty argument made by Troy. Pressure from a
superior can lead to a decision whether to act in accordance with stage 3 or at a higher
level of moral reasoning.