ACC696 Week 4 Discussion Post 6 | ACC 696 - Situational Ethics in Accounting

“Corporate culture starts with an explicit statement of values, beliefs, and customs from top management…It clarifies an organization’s mission, values, and principles, linking them with standards of professional conduct.” (Mintz & Morris, 2020) I work with a state company. The company as a whole is vast and covers many different moving parts. I have to say that I just met the current CEO 2 weeks ago and it was a company event. As a CEO she did not just show up say a speech and then just leave, she literally walked around saying hello to everyone and asking for their names. Since it was the first time, I had seen her in person (I have seen her through Zoom), I did not realized who we were talking to. We had a conversation, she asked what the department I was from, how I like it, how long I have been there. As soon as she walked away, I asked our director who were we speaking with. I was shocked at the answer. I have met CEO’s before and none of them were that pleasant. I have worked with politicians and seen the behind the scenes, so I think I am able to pick up on some personal cues, but I would never have guessed that she was our CEO. It was such a pleasant experience. That is the woman right below the top tier, and I think that can tell a lot about her management, and values. She is still new, and so am I so I hope the she has the chance to leave her mark here. The CEO position is a political position, in which they are easily switched out once the elections come about. A separation of duties in the workplace is a large part of corporate governance. Internal mechanisms and controls are also parts of governance. (University of Florida) The way the company is owned and controlled makes up the foundation for a company. Everything else fills in the space. At my work place there are internal procedures that must be followed by the employees. As a loan and grant auditor we definitely see a separation of duties all throughout the company. The manage has to sign off on the project, and if it is over 100,000 the Director of the department signs off along with the manager, and if the grant amount is over 1 million there is an additional signature from the CFO. This is just the sign offs, within this there are levels, and duties among them where it is more separated. So, there is not just one party in charge of everything. Within the treasury department there are at least four tiers in their hierarchy. In the Contracts department, we are the auditors, we have approval of projects $50,000 and under. Our Director can approve all other amounts. We are delegated which projects are for us to review, and the project managers are delegated which projects become theirs. Each department and team within are accountable for their share of the work. What we see a lot is because our audit it the last part of the process before the grants/loans are paid, many point their fingers in our direction. My teams director does her best to keep track and proof of when we receive the projects, and what the status is of our review. The projects pass through a lot of hands and teams before we initially receive it, but the project managers were never told when we received it. So, they are now being added to the emails to minimize our risk. Our director finds this to be the best thing for us right now. I know that this happens in AP and AR but I can’t explain how it works in those departments. Computer systems (software, and online platforms) have different people keeping track of everything. From access, to passwords they have separation of power there as well. “Organizational ethical climate refers to the moral atmosphere of the work environment and the level of ethics practiced within a company.” (Mintz & Morris, 2020) I have not yet gone to the Board of Director’s meeting so I cannot speak much about the board, there is one coming up though! From what I understand they are willing to work with the project managers to try and fix things to allow for more of a streamlined process. The legal department as well does the same thing. I have learned that before anyone would just print and copy whatever and there was no log, but now we have to scan our IDs at the printer/scanner/fax machine, and it keeps a log of everything that we do. For our department we print A LOT, easily 100-500 pages per project. So we do use the machines a lot, but a coworker told me that an employee (long ago) would bring in personal things to print and scan. From an accounting POV it costs the company more on ink/toner/ paper, but tax wise that is a write-off anyway. The card reader id a way to minimize costs, but it is helpful to have access to our own accounts instead of everything just printing all together. Of all the places that I have worked, most of them have been a division of a corporation. In fact, I am working another job now that is part of a bigger corporation. I currently work for Dollar General Distribution Center. I am the administrative assistant and have many hats in that position. Within the dc, I have seen and experienced corporate governance at its finest. We have clear roles and responsibilities. I know what I am supposed to do every day. My bosses know what they are supposed to do, and the general warehouse workers know what they are supposed to do. We also have policies, practices, procedures, and codes of conduct that have to be followed. If these things aren't followed, there will be consequences and those consequences could be the ultimate of someone getting fired. If you have a strong corporate governance, it should ensure that the business environment is fair and transparent. It also helps to make sure that the business is accountable. And last but not least, it can also ensure that the social impact in society is the correct one. I have worked for a local utility company that practiced the stewardship theory with corporate governance. The utility operated in a small town, and it was the only option for electricity for all the residents. Because the utility operated as a monopoly and provided a resource that people relied on, it made it essential for the company to consider more than only the shareholders. The textbook's authors discuss that “stewardship advocates recognize that directors need to consider a broader range of interests” (Mintz, 2020, p.136). The most noticeable way this was displayed was through the “tone from the top” (Mintz, 2020). One way leaders within an organization can set the tone, is to model the type of behavior they expect (Mintz, 2020). Managers and executives modeled this by making decisions that benefited customers and shareholders. Profits were reinvested into the company to maintain and improve infrastructure, which was for the customers' benefit and to keep energy costs low. This is a different approach than agency theory, which is focused only on the shareholders (Mintz, 2020). Within my professional life, I have had to weigh opportunity costs in procedure changes. I deal with several aspects of the college and with how we run and process transactions due to regulations we have an astronomical number of clearing accounts. In trying to better the process and diminish errors, it was alot of work for myself up front and would be difficult having to train users properly but would ultimately streamline my work, the users work, and make auditing more straight forward. I believe I touched upon corporate governance in my example above, having to change our policies and procedures to mitigate errors, increase internal security, and improve reporting accuracy. Razaee, in his book Corporate Governance and Ethics, points out that corporate governance is shaped by internal and external mechanisms as well as policy interventions through regulations. Corporate governance entails developing formal systems of accountability, oversight, and control. Strong mechanisms lessen the opportunity for an employee to make an unethical decision and has been proven that it has a positive relationship with social responsibility. There are three strong pillars of corporate governance that need to be recognized: Transparency, accountability, and security. Some organizations view corporate governance in a way that as long as they are maximizing shareholder wealth and profitability, they are fulfilling their core responsibilities (Mintz, 2016). In my career, I have experienced stewardship theory, agency theory and capitalist theory. Currently, however, I am working in a position where stewardship theory is more valid than the other two. In stewardship theory, managers and directors are viewed as stewards for their companies and have fiduciary duty to act in the best interest of their shareholders. Managers and directors choose interest of shareholders, perhaps psychologically identified as the best interests, over self-interest, regardless of personal motivations or incentives. I currently work for local county government, and my director, regardless of how it makes her look or our department, always does what’s right and in the best interest of the board of county commissioners and the general public/taxpayers. It is important that all of our locally elected officials know and have trust in their finance department, not only for other locally elected officials, but for the taxpayers to know their money is being handled ethically and not being embezzled. We have a neighboring county that a few years ago, one of their directors was using his purchasing card in the utilities department, to purchase tires, once the tires were received, he was selling them on the street and from his home. With this information, our own BOCC decided to do a restructure and moved some of the responsibilities from the purchasing department to finance, where we are more closely knit as a group, and question everything that slightly looks suspicious that comes across our desk. We don’t do it for our own personal gain, we do it for the benefit of the county, our elected officials, and our taxpayers. For us, transparency and accountability are two very large parts of our environment. Corporate governance is important because it creates a system of rules and practices that determines how a company operates and how it aligns the interests of the stakeholders. Good corporate governance leads to ethical business practices, which lead to financial viability (Investopedia.com, 2022). Resources Chen, J. (2022, August 26). What is corporate governance? Investopedia. Retrieved September 15, 2022, from https://www.investopedia.com/terms/c/corporategovernance.asp Mintz, S. (2016). Ethical Obligations & Decision Making in Accounting + Connect Access Card. Mcgraw-Hill Education. Mintz, S., Morris, R. (2020). Ethical Obligations and Decision Making in Accounting (5th ed.). McGraw-Hill Education University of Florida. Types of Internal Controls. https://www.fa.ufl.edu/directives/types-of- internal-controls/