Xavier University

Ateneo de Cagayan
Cagayan de Oro City, Philippines

Passed by:
Guiling, Anna Azriffah Janary S.
Dael, Wendy
Sim, Alyn Mae
Balindong, Jafarien
Sidic, Mohammad Aslam

Passed to:
Atty. Rosalie Grace Escobia, CPA

August 5, 2019
II – BS ACCOUNTANCY (ACC)
EXERCISE 1:
Illustrative Case: Resolving an Ethical Dilemma

David Lawyer, sets up a small loan company specializing in loans to business

executives and small companies. David does not spend much time in the business
because he spends full time with his law practice. No employees of David Law Firm
are involved in the small loan company.
*Indicating that no employees of David Law Firm are involved in the small loan company
means that the latter is not a domain of the former. This means that the two are separate
companies.

Ethical Issue
 Is it ethical for David to start another company without investing preemptive
commitment and care for it?
 Is it ethical for David to continue his small loan company without giving much time in
handling the business?

Who is affected and how is each affected?

There are typically more people affected in situations in which ethical dilemmas occur than
would normally be expected.
Who How affected
David Lawyer Full commitment to work will be affected
Reputation will be affected.
Might get losses for poor Pay will be affected.
Performance evaluations may be affected.
Attitude towards the firm may be affected.
Employees in the Less supervision
Loan Company Lax pressure on maximizing work capacity
Less incentive to work hard
The Loan Company Poor Management
Itself Success of the company may be affected.

Bert’s Available Alternatives

 Divide equal time in working for the two companies
 Assign a person to full-time manage the loan company on his behalf.
 Stop the operation of the small loan company.

Each of these options includes a potential consequence, the worst likely one being
termination by the firm.

Consequences of Each Alternative

In deciding the consequences of each alternative, it is essential to evaluate both the short-
and long-term effects.
  Divide equal time in working for the two companies
- David will have to cut his time in working in his law firm which might lessen the
productivity of the work capacity of the firm.
- Both companies will have supervision of the owner which necessarily reflects the
possible success of both.
-
 Assign a person to full-time manage the loan company on his behalf.
 Stop the operation of the small loan company.

Appropriate Action
Only Bert can decide the appropriate option to select in the circumstances after considering
his ethical values and the likely consequences of each option.

At one extreme, Bert could decide that the only relevant consequence is the potential impact
on his career. Most of us would conclude that Bert is an unethical person if he follows that
course.

At the other extreme, Bert can decide to refuse to work for a firm that permits even one
supervisor to violate firm policies. Many people would consider such an extreme reaction
naïve.