Moral Dilemma in Accounting Management

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Table of Contents

Introduction
Possible Solutions
Ethical Theory Analysis
IMA Code of Ethics
Conclusion
Works Cited

Introduction

The study of ethics is primarily focused on determining the best course of action in various situations. There is a wide range of ethical theories that can be used to resolve ethical dilemmas. In the present case, the moral dilemma involves two cost accounting managers, John and Patty. John is told by a divisional controller that Patty is about to be promoted, but he already knows that she had accepted a controller position in a different company. To deal with this ethical dilemma, I would analyze the case from the perspective of various ethical theories, which would allow suggesting the best solution for John.

Possible Solutions

There are two key choices that John could make in this situation, and each one has advantages and disadvantages for John. First, he could keep the information about Patty’s promotion and her intention to leave the company to himself. In this case, he would most likely receive the promotion instead of Patty when she leaves. However, if Patty finds out about the situation, it is likely that she will become upset. As a result, this choice would affect the relationship between John and Patty. The second option is for John to tell the controller about Patty’s plans, which would result in either Patty staying in a new position or John receiving the promotion instead. Additionally, John could speak to Patty and let her know that she is about to win a promotion. This choice would have a positive effect on their relationship, and it will also allow Patty to make a decision that feels best. If she sees more benefits in working for another company, John would still receive the promotion. However, if Patty decides to stay, John will have to remain in his current job, which is a disadvantage of this option.

Ethical Theory Analysis

In order to analyze these solutions and suggest the best one from an ethical viewpoint, it is necessary to review and apply the ethical theory. The two ethical theories that would be most applicable to the case are utilitarianism and deontological ethics. This is because these theories can be fitted to specific situations that involve two or more persons. Other ethical theories, including humanism and Confucianism, are more suitable for analyzing major ethical issues and human behavior in general and thus are not specific enough for the chosen case.

Utilitarianism

Utilitarianism is considered to be a branch of consequentialism because it focuses mostly on the outcomes of a decision. It was first suggested in the writings of Jeremy Bentham and Stuart Mill, who sought to develop an ethical theory that could be applied in the fields of law and policymaking (MacKinnon and Fiala 56). Until the development of utilitarianism, many people viewed morality as the opposite of human freedom and pleasure. Mill sought to dispel these myths by suggesting that pleasurable actions may still be considered moral as long as they do not infringe harm on other people (MacKinnon and Fiala 56). Bringing the most happiness to the most significant number of people is the goal of moral actions, in accordance with utilitarianism. This means that each decision should be analyzed based on its consequences for all involved parties. A decision that benefits one person but harms many others would be considered immoral, whereas sacrificing personal benefits for the good of others would be the opposite. However, the best decision possible would be the one that is positive for all those involved.

Based on these principles, each option available to John can be considered moral. If John decides to withhold information from both the current controller and Patty, he will benefit from getting a promotion, while Patty would benefit from having a controller position in a company that is located where her family lives. The current controller would receive a promotion either way, which is why this option would be positive for all those involved. The second choice, however, could be potentially harmful to John because he would not receive a promotion if Patty decides to stay in the company and accept the promotion.

Moreover, if Patty is upset due to living away from her family, remaining in the current job would be harmful to her, too. The only way that telling the controller or Patty about the situation would be beneficial for all parties is if Patty decides to leave the firm anyway. In this case, the utility of John’s decision would be more significant because the parties would receive an additional benefit of an improved interpersonal relationship. However, in accordance with utilitarianism, it is also essential to weigh the probability of each outcome (MacKinnon and Fiala 59). The likelihood of Patty choosing to leave the company after getting news about her promotion is unclear. Therefore, the best option from the viewpoint of utilitarianism is for John to withhold information from Patty and the controller. In this case, the beneficial outcome for all those involved is almost certain.

Deontological Ethics

Deontological ethics is based mainly on the work of Immanuel Kant and is usually compared with utilitarianism because of their essential differences. According to MacKinnon and Fiala, Kant “objected to basing morality on the consequences of our actions” (70). This is primarily because he viewed a moral act as a person’s duty rather than as something that can be measured in terms of pleasure or happiness resulting from it. The idea of duty is at the core of deontological ethics, which considers people’s moral obligations to one another (MacKinnon and Fiala 75). Kant also believed morality to be a universal concept, thus rejecting the theory of moral relativism in favor of absolutism (BBC, para. 4). This suggests that there can only be one correct decision to the ethical dilemma presented in the case.

From the viewpoint of deontological ethics, it is always wrong to lie or withhold relevant information, regardless of the reason and the consequences of telling the truth. In deontological ethics, people also know the difference between right and wrong actions and should be able to choose the morally right option at all times (BBC, para. 1). In this case, John learned valuable information that could have an impact on other people depending on whether it stays hidden or is told. Hence, based on the principles of deontology, moral reasoning would be in favor of telling both Patty and the current controller the truth about the promotion and Patty’s intentions to leave. While this choice would only benefit John if Patty decides to quit the company, it would be a morally right action.

IMA Code of Ethics

Since the situation occurred in professional settings, another critical point that has to be examined here is which choice would comply with the code of ethics of the Institute of Management Accountants (IMA), which is the key document governing ethical practice in John’s workplace. Information sharing is an integral part of the IMA code of ethics, and there are four separate principles that apply to communication here: competence, confidentiality, integrity, and credibility (2). The principle of confidentiality would encourage John to withhold information from Patty and the current controller. However, the principles of integrity, competence, and credibility prompt the opposite decision.

For example, the IMA states that accountants should “provide decision-support information and recommendations that are accurate, clear, concise, and timely” (2). In the present case, information about Patty’s intention to leave could affect the current controller’s decision regarding the promotion. Similarly, the principle of integrity argues that accountants should mitigate conflicts of interest where possible, and the best way to do so, in this case, would be to share relevant information with all parties (IMA 2). Lastly, the principle of credibility urges accountants to “communicate professional limitations or other constraints that would preclude responsible judgment” (IMA 2). The conflict of interest, as well as the lack of information, could hinder responsible judgment of all involved persons, which is why John should communicate information to the current controller and Patty.

Conclusion

Overall, although the principles of utilitarianism would dictate that John should withhold information, deontological ethics and the IMA code of ethics make it clear that the best solution would be to share information about Patty’s intentions to leave and promote with the current controller and Patty, respectively. This decision would support John’s ethical professional practice as an accountant while also improving his reputation and relationship with Patty. Hence, it could also be ethically correct from the utilitarian viewpoint, especially if it results in Patty leaving and John receiving a promotion. The decision to communicate information to both parties is thus the most balanced option available to John in the proposed scenario.

Works Cited

BBC. “Duty-Based Ethics.”BBC UK, 2014, Web.

Institute of Management Accountants (IMA). IMA Statement of Ethical Professional Practice. 2017, Web.

MacKinnon, Barbara, and Andrew Fiala. Ethics: Theory and Contemporary Issues – Concise Edition. 8th ed., Cengage Learning, 2015.

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