World Com Ethics free essay sample

What are the ethical problems faced by Betty Vinson, a CPA and Director of WorldCom’s Management and Reporting Division? Betty Vinson has a reputation as a hardworking, loyal employee who would do â€Å"anything you told her†. Problem came on October 2000, when the company profits had went down and her boss, Buford Yates, Jr.Director of General Accounting ask her and another manager Normand to release $828 million of line accruals into the income statement. This proposal is ethically wrong so the ethical dilemma is to obey the orders from her boss or not and to know the consequences for the choices she make. If she does according to what her boss says, the company revenue will continue to be positive and therefore the company market value will continue to rise and it will maintain as one of the biggest companies in the stock market. The whole company from the top management to the lower level worker will continue to receive income for the time being until the fraud is revealed. We will write a custom essay sample on World Com Ethics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This action will be unethical and the consequences are, firstly, she might be placed in court and put to jail if caught. Secondly, her guilt might haunt her even if she is not caught. Thirdly, she might lose her reputation if she got caught and might not be able to find another job. Fourthly, if she is put to jail, her family will meet not only financial problems but also emotional problems like, her children might ask â€Å"why is mummy in jail? † and her children might even be looked down on because of what she had done. Fifthly, her husband, parents, relatives and friends might leave or despise her because of her unethical act. Sixthly, her husband’s friends might look down on him because his unethical wife. Seventhly, her husband, parents, relatives and friends might be ashamed and they might be looked down by their friends too. On top of that if the fraud is revealed, the reputation of the whole company WorldCom might be destroyed and might even be forced to close down and all the people in the company and the customers the company serves or have relation with might blame her for their lost. If she reject the proposal and do what is ethical. The consequences are, firstly, she might lose her career that she had build up for 4 years and because it is in the midst of an economic downturn, there is a also a chance that she might not be able to find another job in her age. This will affect her family income and so might in turn affect her children education, her family spending budget. What are the ethical problems faced by Cynthia Cooper, a CPA and manager of Internal Audit at WorldCom? Cynthia Cooper is a strong-willed woman and she was the head of the 24 member internal audit department. CFO Sullivan asked Myers to restrict the scope of Cooper’s enquires. March 2002, Cooper’s team received a complained from the head of the wireless business unit for about a $400 million accrual in his business for expected future cash payments and bad debt expenses that had been transferred away to push up the company’s earnings. Sullivan and Arthur Anderson auditors had supported the transfer and when she approached Anderson, Anderson partner assures her that what they did is just aggressive accounting entries and will not explain to her the details unless it was a direct order from Sullivan. Cooper then brought the issue to WorldCom’s audit committee but was told by Sullivan to stay away from the wireless business unit. At this point, Cooper had a dilemma, whether to continue to investigate or just drop the case as both Sullivan and Anderson had already supported this transfer. If she chooses to continue the investigation, she might lose her job as a director of internal audit which might affect her financial wealth. Secondly, finding a job in the economic down turn during that time could be hard and maybe harder for her age. Thirdly, there might be financial problem taking care of her 8 month old daughter and her family. Fourthly, even if she continues to investigation, and she is right that there is a fraud with the accounting, there might not be enough evidence to charge Sullivan and he might then take revenge on her and maybe also on her family after he is release as innocent. Fifthly, if she continues to investigate and if there is actually nothing wrong with the accounts, she could be dismissed or even sued. If she chooses to drop the case, she will not be acting her responsibility as a director of internal audit. If it is found out that it is truly a fraud, she might be blamed for not fulfilling her duties and be charged in court and maybe dismissed. Secondly, her conscience might haunt her. Thirdly, her reputation might be affected and so will her career and she might not be able to find a job after that. Fourthly, her family, relatives and friends might despise or leave her. This might affect her emotionally and might in turn affect her children too. Fifthly, the people in the company or related to the company that lost their job or earning might blame her for their lost. Question 2 To me, moral courage means taking up the necessary responsibilities to do or say what is true and right even in the midst of difficult situations, placing the responsibilities and the beliefs of one’s profession on top of self interest. On top of that, I think moral courage also have different levels, the lower level of moral courage is to quit when you know that there is something wrong. The higher level of moral courage is not only personally doing the right thing but also make others do the right thing. An example of someone that does not practice moral courage is Betty Vinson. She is the Director of management reporting, her responsibility is to check and to report the sales and income statement accounting to the management and also to the society as accurately as possible. In this case, we could see that she knows that it is unethical to make the adjustments on the accounts so she told her boss that the proposal was â€Å"not good accounting†. She could have exhibit moral courage by telling her boss that this is unethical or illegal and tell him that this should not be done but she did not. Yates continues to emphasise that David Myers, Controller told him that it is a one-time problem which in a way decreases the risk and unethical one feels and Vinson in the end give in and agreed to the proposal. If she exhibit moral courage she could have rejected and the worst quit but she did not. What she might not have thought about is that this is a point of no turning back. She is practicing cultural ethical relativism as there are no true standard ethical practices in the company. This is found as there is no set of corporate code of conduct as Bernard Ebbers, CEO called it a colossal waste of time. On top of that the corporate culture of the company is basically â€Å"do as you are told with no questions asked†. After Vinson did what was proposed, she was overwhelmed by her guilt and she planned to resign which indicates that she is thinking more individual ethical relativism than cultural ethical relativism. If she had a lower level moral courage, she would quit immediately or if she had a higher level moral courage, she could gather evidences and then sue Sullivan and Ebbers and turn herself in but she did not. When Ebbers heard about the accountants’ concern, he told Myers that the accountants would not be placed in this situation again. Following that, a few days later, Scott Sullivan, CFO told Vinson and Normand basically that we are on the same plane, if Vinson was to quit, the plane will crash and we will all die so Sullivan asked Vinson and Normand to stay till the plane lands which means when the business is back on making good profit. Sullivan also assured them that they were doing nothing illegal and that he would take full responsibility for their actions. What Ebbers and Sullivan did was to convince Vinson to stay and to continue to practice cultural ethical relativism and lessen her guilt. Firstly, Ebbers told Vinson that they will not be ask to do this again and this is an assurance from the CEO. If she stays, personally she will continue to get income for her family and this is very important to her as she earns about $40,000 more yearly compensation than her husband. On top of that she is also worried finding a job in the middle-age worker with the comparable compensation. Secondly, Sullivan, CFO have a reputation of â€Å"whiz kid† so when Sullivan says that it is not illegal, Vinson started to doubt at her worries and on top of that Sullivan says he will take full responsibility for her actions. Therefore, it seems like there is more reasons for Vinson to continue to stay then to quit and so she remain in the company. If she had moral courage, she would place the responsibilities of her profession on top of self interest, which is to report the true accounting and place one’s interest aside. She placed self interest first. On April 2001, again the similar situation occurs and this time it is an even more unethical than the first as it included forging dates so as to hide the adjustments made. This was the situation Ebbers said will not happened again, but he lied. Vinson knew that what she did was wrong but because she went through the first dilemma without being caught and with her personal reasons and assurance from the CEO and CFO, and her hope that it is the last and she could see the light at the end of the tunnel soon, she decided follow the orders and practiced yet again the cultural ethical relativism and ignore her individual ethical relativism and her conscience. Her guilt eventually had its toll on her and she hoped each time that it would be last faded but as she received a promotion and a raise to roughly $80,000 she decided to continue. Until Spring 2002, when she decided to quit but was much too late. All these while, if she had moral courage, she would place the responsibilities of her profession on top of self interest, which is to report the true accounting and place one’s interest aside but she placed self interest first. An example of someone that practices high level of moral courage is Cynthia Cooper, a CPA and manager of Internal Audit at WorldCom. Her responsibility is to check the accounts of the company and report to the society whether the accounts have a true and fair view. In the WorldCom case, Cooper had a dilemma, whether to continue to investigate or just drop the case as both Sullivan and Anderson had already supported the accounts. There are many consequences if she continues to investigate, she might lose her job which in turn might affect her financial wealth and she might have problem finding a job for her age, during the economic downturn after the dot com bubble burst. She chose to continue to investigate which shows that she had the moral courage to stand up against what is wrong. She practices individual ethical relativism of doing what is true and right than to practice cultural ethical relativism which is not to question the higher manager, Sullivan. Knowing that it is difficult to obtain the necessary evidence to find who lead the fraud and who did the fraud, she and her team continued to exhibit high level of moral courage by searching for the evidences. Finally, in June 2002, they had discovered $3 billion in questionable expenses and the fraud is revealed and the wrong was corrected.