Controllership in Accounting

Topic: Violations of Internal Control

Michael has been recently hired as the Distribution Supervisorfor an international candy

company. The plant is in a rural area and is about to begin amajor expansion that will triple

its capacity. The company has generous benefits and has paid allmoving expenses for Michael

and his family. During the move, however, the movers damaged alarge piece of oak

furniture. Michael has contacted the moving company. Theinsurance is by the pound and

would cover only a small part of the worth of the item. Michaelhas explained this to the

moving company, but it refuses to reimburse him for the item’svalue.

Michael approaches his supervisor, Richard, about the problem.Michael has been on the job about a

month and enjoys the partnership they have developed to date.Michael had originally

interviewed with Richard, and Richard’s recommendation had beena major factor in Michael’s getting

the job. Michael has found the types of challenges he waslooking for in a new position and is

already becoming a major player in planning for the newexpansion.

Richard tells Michael that he does not think he can do anythingto persuade the moving company to

reimburse Michael and suggests that Michael pad his next fewexpense reports to cover the cost.

Michael is surprised at Richard’s suggestion, because thus farRichard has dealt with him in a very

evenhanded manner and has appeared to have strong businessethical standards.

Answer the following questions from the case above :-

1. What are the relevant facts of the case?

2. What, if any, are the ethical issues?

3. Who are the stakeholders?

4. What are the possible alternatives including any ethicalconcerns?

5. What are the practical constraints?

6. What action(s) should be taken?