The provided case study is an interesting task that shows the manipulations of entrepreneurs in today’s business environment. It is obvious that this case contains a conflict of ethical and professional interests. At the first glance, it may seem that the IMA Statement of Ethical Professional Practice can serve as the object of manipulation and can be used to protect the Chief Financial Officer, but also serve as a basis for accusing him of non-compliance with its principles. However, an in-depth analysis of the case proves that most of the statements condemn any manipulation with capital and are aimed to stop fraudulent actions. In the following paragraphs, the various aspects of IMA Statement will be considered to prove that Wright did not act ethically and in compliance with the statements standards.
The basic principles of the statement are Honesty, Fairness, Objectivity, and Responsibility. The case has a contradictory point. At the first glance, the actions of John Wright can be justified from a financial point of view; however, at the same time, it is wrong to claim that he acted in the interests of the company. CFO is the second most important person in the firm after the CEO, who is responsible for the well-being and the choice of successful strategic direction. Thus, although it may seem that his actions were directed by the considerations of the well-being of the firm, his act was a fraud because he has concealed the depreciation of costs of the enterprise, automatically increasing its value. Moreover, it should also be noted that if he were accused of cheating, the consequences would be significant to the entire company and its employees. Thus, it is wrong to claim that he acted as a responsible leader. The violations of the Objectivity principle are obvious from the discussed below.
IMA Statement standards serve as an excellent proof of the irresponsible approach of James Wright. The first ones to be mentioned are the aspect of competence and the violations concerning the second subparagraph, which states the need for compliance with laws, regulations, and standards. The first paragraph establishes the required level of professional expertise, and the third one states on timely advice and assistance in decision-making. From the case study, it is clear that Wright is a great leader and an experienced CFO who knows the loopholes in the legislation that uses for the benefit of his company. However, at the same time, the question arises: is it appropriate to use them with this aim? Although it may be stated that the business environment is dangerous and highly competitive that requires CFOs and managers to find solutions to keep the company afloat. Nevertheless, such actions contradict the ideals of the democratic society as well as the ethical norms. Moreover, the current decision of James Wright might have found a solution to the problem faced, but, at the same time, he has put it at risk of revealing it, which, in the future, can lead to significant losses or even bankruptcy. It is worth remembering the case of ENRON, the manipulations of which have led to the liquidation of the company. Thus, James Wright violated the first standard of IMA Statement.
The second standard, confidentiality, may look like the one where CFO has clearly succeeded. It applies to subparagraph number one and number two, which require not to disclose confidential information and compliance with privacy in the company. Obviously, if Wright succeeded in his attempt to save the firm, and the company’s shares have risen, the information about his machinations is undisclosed. In this case, it is not clear whether he discussed it with other managers or it was only his own decision. It can be assumed that employees know about it, so the subparagraph number two is met in any case, whether it is ethical or not.
If the preceding paragraph may comply with the actions of James Wright to some extent, the next two indicate a clearly unethical behavior according to the Standard. For example, subparagraph number two concerns the retention of the activities that may be unethical. As mentioned above, the CFO acted irresponsibly because he has compromised the companys image as well as its employees. Thus, the point here is not whether he is competent or not, but whether the person is willing to bypass the general rules for the sake of material gain, which in this particular case, was the primary concern. This behavior directly relates to the third paragraph, which mentions the discreditation of the profession. James Wright can be an excellent CFO, a great strategist, a clever accountant, but he will never become a true leader by example. Although it can be said that “the winner takes it all,” the laws and rules apply to everyone. Moreover, investors and the business community may be interested in the success of the Wright`s company. The CFO`s fraud increased the value of the shares; however, the substitution of facts is not the best solution in any case, especially if it concerns the company’s assets in the stock market. This scheme might work once, but it also implies some dangers as stated earlier. Moreover, Wright postponed the date of renewal of equipment in the restaurant, which also leads to future losses or an outflow of customers. The CFO could consider the ratio of possible losses and profits due to decreased level of services. The clever move that helped to increase the value of the shares contradicts an ethical aspect rather than improves a financial one. The same applies to the three subparagraphs of the credibility standard. The director did not consider the possible costs of disclosure of the outdated equipment in case of control check.
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It is also possible to assume a situation when James Wright would have discussed the issue with the top manager to ask his opinion. Therefore, if I were to give my point of view on the issue, I would not support such a decision. To support my answer, I would mention the IMA Statement of Ethical Professional Practice to argue that the proposed move is unethical and dangerous for the company in the long run. Furthermore, it is necessary to take into account the future financial audit, which can detect the concealed issues. However, the CFO makes this decision alone, and it is very likely that my arguments might not have been taken into account since the human factor plays a key role in decision-making.
As a conclusion, a true leader is not someone who uses any means to achieve the goal. It is a person who looks for ways to fit into the ethical and legal framework. For example, a situation where the owner of the socially responsible business begins to use such tricks to increase the competitiveness of the company, his actions may lead to the reduction of profits or even collapse. It is not difficult to change the equipment purchase date, but it is a challenge to find a solution to increase the market value of the company’s shares by the legal means. It is unfortunate that many managers are used to such means of enrichment, preferring simple and dishonest ways. An entrepreneur`s task or that of the CFO is to find creative and effective solutions without engaging in fraudulent activities. James Wright can be considered a true expert in his field, but he cannot be called a professional because he does not adhere to the principles and standards of his profession.
Thank you for your attention!
