The former manager of the company was involved in the manipulation of the financial operating results. The manager reassigned some of the costs in the direct cost of manufacturing in the company to the non-controllable fixed cost sector of the organizations accounting. The financial ratios of the company were, therefore, adversely affected by the falsification of the company image that the manager had created in the course of the manipulation. There was also a false belief in the company's operations running smoothly and efficiently. The manipulation of the costs to falsify the company's financial performance and the position was against the ethics of professional practice in the accounting sector. The problem would have landed the company in trouble with the financial regulation institutions in the United States of America due to its failure to adhere to the universally accepted accounting principles. Once the issue was realized, the then manager was fired without notice.
Shafer (2015) explains that the causes of the accounting fraud and the breach of professional ethics are diverse. One of the primary reasons, which have been observed in the case scenario, can be explained using the fraud triangle theory. The approach states that the objectives of intentional fraud range from the attitudes of the accounting managers, the presence of the opportunity to breach the ethics and pressure to perform. The manager violated the professional ethical standards such as credibility. The manager proved not to be credible when he was involved in the intentional manipulation of the values at the company to create a falsified image of the company's excellent financial performance. The other standard that the manager went against in the falsified accounting reports was integrity. If the previous manager had integrity, he would have acted according to the accounting principles to avoid the erroneous reporting of the values in the expenses of the organization.
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Having been fresh from college, it is expected that the new hire will be conversant with the ethical principles surrounding the accounting process and how best to apply such standards in different financial environments. Therefore, the new hire, after learning of the intentional breach of ethics by the former manager, will be in support of the idea to fire the previous manager without notice (Melé, Rosanas, & Fontrodona, 2017). Various factors could have led to the new hire accepting the new job offer in the field of accounting at the organization. One of such elements is the confidence of the new hire in his ability to integrate the professional ethics into the accounting job and reduce the financial impacts that the manipulation of the costs would have. The other factor is the belief in the new hire that he could turn things around at the company concerning the accounting sector.
The new manager is expected to relate finance, accounting, and their relationship with ethics regarding the firing of the previous manager. The new manager will then aspire to have efficiency, which the former manager lacked. The new manager may have taken the managerial position to help the company recover from the financial distress, which the manager has caused at the organization ( Melé, Rosanas, & Fontrodona, 2017). The new manager may also have accepted the position to contribute to the probe surrounding the unusual activities of the manager. He could have taken that position to prove the knowledge of the application of ethics in the financial accounting to correct the financial setback that the company is about to face owing to the breach of professional ethics by the former manager. The manager may also take the position to lead the accounting process as an example, which will be free of intentional errors.
Following the financial crises that have hot the world in the recent past, companies have had to ensure they have an accurate record of their accounting and the money they have been spending on the average. The generally accepted accounting principles have therefore been developed to ensure that the organization in the world follow a universal accounting procedure (Cumming, Hou, & Lee, 2016). The accounting principles have been customized to integrate professional ethics, which have been guiding the reporting of the financial performance of the companies. The intersection of the sectors of finance and ethics has been aimed at mostly identifying the case of accounting fraud that may be taking place at the organizations. The investigations of the fraudulent activities in accounting and their rectification have led to the stabilization of the corporate performance of the companies and the cultivation of the corporate social responsibility which is deeply entrenched in an organizations culture (Cumming, Hou, & Lee, 2016).
Ethics have growth in the essentiality in the financial operations from all spheres of the corporate performance and mostly in the accounting procedures. The leaders of the various organizations across the globe have had to abide by the accounting rules to maximize of the businesses output and their expansion which comes with an increase in the consumer base targeted (Musa, 2015). The integration of professional ethics in the field of accounting has provided a promising future in the area of accounting regarding the aversion of one of the financial crises that have been adversely affecting the companies. The companies with the high ethical standards in the field of accounting have been associated with excellent financial performance and the excellence in the other spheres of company performance such as the cultivation of morality among all the employees of the company (Musa, 2015). The cultivation of better company culture has been found to discourage the managers from committing the accounting crimes such as the case of the manager coming up with falsified values to prove that the company is running smoothly (Musa, 2015).
References
Cumming, D., Hou, W., & Lee, E. (2016). Business ethics and finance in greater China: Synthesis and future directions in sustainability, CSR, and fraud. Journal of business ethics , 138 (4), 601-626.
Melé, D., Rosanas, J. M., & Fontrodona, J. (2017). Ethics in finance and accounting: Editorial Introduction. Journal of Business Ethics , 140 (4), 609-613.
Musa, M. A. (2015). Islamic business ethics and finance: An exploratory study of Islamic banks In Malaysia. In Developing Inclusive and Sustainable Economic and Financial Systems (Vol. 4, pp. 21-36). Bloomsbury Qatar Foundation Journals.
Shafer, W. E. (2015). Ethical climate, social responsibility, and earnings management. Journal of Business Ethics , 126 (1), 43-60.
