...taxpayer, to claim the same deductions as an offset to ITW’s otherwise taxable income. As a result of tax audits, ITW wrote-down its deferred tax asset by $383 million. Whether motivated by a sense of justice or the pursuit of a seven figure reward, the Wall Street insider known only as Mr. ABC has demonstrated the huge return on investment available to IRS whistle-blowers that provide information under a program that pays out between 15 percent to 30 percent of any recovery, without any monetary cap on the amount of the reward, It was the third time Mr. ABC had received an IRS whistleblowing award including $1.1 million in 2004 when he provided information about abusive tax shelters that helped Enron avoid taxes on more than $600 million of taxable income. He also received $1.24 million in another case. In testimony before the 2004 U.S. Senate Finance Committee, Mr. ABC proceeded to explain his motivation to blow the whistle by criticizing the government’s ability to identify and investigate sophisticated tax shelters. “When I looked through all the financial engineering and big words, I believed it was just a fake deduction scheme, he testified.” The IRS refused to comment noting confidentiality issues. Questions 1. Should we regard Mr. ABC has a new “caped crusader” or an opportunist? Explain the reasons for your response. Mr. ABC may be considered both a “caped crusader” and an opportunist. Maybe...
Words: 751 - Pages: 4
...Tax Cheats 1. The ethical issue in this case is Wall Street insider Mr. ABC disclosed the information of Illinois Tool Works Inc. (ITW) tax fraud to IRS and received a whistleblowing award of $2 million. 2. The accounting issue involved is ITW enlisted a Swiss bank to fabricate unauthorized tax deductions in order for ITW (bank’s client) to claim the same deductions as an offset to ITW’s otherwise taxable income. 3. The incorrect or improper action taken in this case was ITW conducted illegal tax avoidance by involving a Swiss bank to fabricate unauthorized tax deductions by duplicating same deductions for both of them. 4. The correct or proper action that should have been taken is ITW should have followed GAAP and related regulations to not duplicate tax deductions and avoid tax legally. 5. Answers to case questions: 5.1 Should we regard Mr. ABC as a new “caped crusader” or an opportunist? Explain the reasons for your response. In my opinion, Mr. ABC should be regarded as a “caped crusader”. As a Wall Street insider, he has a moral sensitivity that “it was just a fake deduction scheme”. His motivation is to criticize the government’s ability to identify and investigate sophisticated tax shelters. He took the ethical action to expose the fact to IRS. I don’t think Mr. ABC is an opportunist, who is totally self-centered and only took advantage. He has already gained over 2 million awards from first two whistleblowing, so it’s very unlikely...
Words: 555 - Pages: 3
...J Bus Ethics (2015) 131:107–119 DOI 10.1007/s10551-014-2271-z Authentic Leadership and Whistleblowing: Mediating Roles of Psychological Safety and Personal Identification Sheng-min Liu • Jian-qiao Liao • Hongguo Wei Received: 26 July 2013 / Accepted: 22 June 2014 / Published online: 8 January 2015 Ó Springer Science+Business Media Dordrecht 2015 Abstract The issues of organizational wrongdoing damage organizational performance and limit the development of organizations. Although organizational members may know the wrongdoing and have the opportunity to blow the whistle, they would keep silent because of the interpersonal risks. However, leaders can play an important role in shaping employee whistleblowing. This study focuses on discovering the mechanisms of how authentic leaders influence employee whistleblowing with a sample from China. Results demonstrate that authentic leadership is positively related to internal whistleblowing. Team psychological safety partly mediates the relationship between authentic leadership and internal whistleblowing. Personal identification partly mediates the relationship between authentic leadership and internal whistleblowing. The study contributes to the extant theory by filling the gap between leadership and whistleblowing. Keywords Internal whistleblowing Á Authentic leadership Á Psychological safety Á Personal identification S. Liu Business School, University of Shanghai for Science and Technology, Jungong Road...
Words: 10084 - Pages: 41
...report among reporters and society. As we know, integrity is a part of ethical values that shows the quality of being honest and having strong moral principles. It is important to be integrity person to ensure the task or jobs are more honest and there is no abuse of power among the public or private employees. The situation can be seen in several countries, there are a lot of unethical behaviors from employer or employees. There must be a reason unethical behavior happened. So, whistle-blowing protection was introduced in order to prevent any unethically behaviors in organization such as fraud, corruption, abuse of power and so on. Whistle-blowing has been defined as ‘disclosure by a current of former organization member of illegal, inefficient, or unethical practices in a organization to a person or parties who have the power or resources to take action ( Near and Meceli, 1985). It continues to receive media intention (Vinten, 1997). Whistle blowing is a deliberate non-obligatory act of disclosure, which gets onto public record and is made by a person who has or had privileged access to data or information of an organization, about non-trivial illegality or other wrongdoing whether actual, suspected or anticipated which implicates and is under the control of that organization, to an external entity having potential to rectify the wrong doing. Whistleblowing is presented as dissent, in response to an ethical dilemma, in the form of a public accusation against an organization...
Words: 7215 - Pages: 29
...Whistleblowing: Necessary Evil or Good Thing Maureen Haley University of North Carolina – Asheville April 16, 2014 This paper was prepared for Management 484-001, taught by Professor Donald D. Lisnerski Whistleblowing: Necessary Evil or Good Thing Is whistleblowing a necessary evil or good thing? Can whistleblowing be avoided? Can the whistleblower be protected? “A whistleblower is an employee who discovers corporate misconduct and chooses to bring it to the attention of others.”(Ghillyer, 2014) Whistleblowers can be viewed as providing a praiseworthy act or be severely labeled as informers who have breached the loyalty of their co-workers and company. Whistleblowing can be a service to the community and public. Whistleblowing can be ethical or unethical, and the whistleblower discovering corporate misconduct has the options to be an internal or an external whistleblower. Whistleblowing can save people’s lives. Dr. Jeffrey Wigand made the decision to go public with information that his employer Brown & Williamson (B&W) was manipulating the nicotine content, suppressed efforts to develop safer cigarettes, and lied about the addictive properties of nicotine. According to Sissela Bok, in the book Taking Sides: Clashing views in Business Ethics and Society, “not only is loyalty violated in whistleblowing, hierarchy as well is often opposed, since the whistleblower is not only a colleague but a subordinate. Though aware of the risks inherent in such disobedience...
Words: 3746 - Pages: 15
...Whistleblowing: The Right Choice Whistleblowing has become a contentious issue in both the public and private sectors. Whistleblowers are often regarded in derogatory terms. However, they should not be viewed in this manner. They are the average employee who does this out of loyalty. Many are retaliated against, and this forces the whistleblower to seek protections. Despite the negativity and retaliation, whistleblowing is the right decision because it exposes the wrongdoing of the employer. A whistleblower is a “person who reveals to a government agency or news media, confidential information of wrongdoing or conduct he or she regards as unethical”. They are referred to in derogatory terms such as “rat”, “stool-pigeon”, “snitch”, “fink”, and even called disloyal (Liuzzo, 2012, pg 28). But those terms do a disservice to the employee who wants to fix a problem or help the organization. Whistleblowers are none of those labels. Some are considered “citizen crime fighters” or “ethical resisters” who put their careers and lives in jeopardy for the safety of the public (Westman, 1991, pg vii) whose motivation stems from a deep ethical responsibility and loyalty. Any person who decides to speak out understands they have a responsibility not only to the public, but to the company, and to their co-workers. These must be considered in order to determine if whistleblowing is the right course of action. The whistleblower is motivated by whether the perceived...
Words: 2837 - Pages: 12
...BAC4664 – Internal AuditingSection B01DTrimester 3, 2014/2015 | Internal Auditor and Whistleblowing Policies | Group Assignment | | Prepared by:Gabriella Rena Vanessa Darmadji 1121116458Nur Aida Binti Mohd Jasmin 1121118345 | | | Multimedia University Cyberjaya 2015 | INTRODUCTION Fraud negatively impacts organizations in many ways including financial, reputation, psychological and social implications. According to various surveys, monetary losses from fraud are significant. Thus, the organization has to establish an effective fraud management program that also covers the organization response to the whistleblower in the company. It is clear that corporate have major responsibility in their response of complaints regarding accounting, internal accounting control or audit matters where they have to establish audit procedure for the receipt, retention and treatment of complaints. Moreover, the organization has to build appropriate structure of line of reporting for the internal audit to support the effective fraud management program. The report discuss in deep on the Sarbanes Oxley Act 2002 in relation with bursa listing requirement. Furthermore, the whistleblowing also become the main issues on this report. The thorough discussion about what whistleblowing is and the key characteristics to support good whistleblower hotline also is conferred. REPORT Summary and compare the requirements of section 301.4 of the Sarbanes Oxley Act 2002 and compare those...
Words: 6720 - Pages: 27
...Sullivan’s head and reported her findings to the audit committee. This was a huge gamble for her and was risking her career. Section 406 of the Sarbanes-Oxley Act of 2002 requires the disclosure of the code of ethics for senior financial officers. The commission shall issue rule to adopt a code of ethics, and if not, reasons must be disclosed. Also, section 406 defines “code of ethics” and requires the commission to disclose its changes of the code of ethics. The Sarbanes-Oxley Act was developed after a series of financial fraud events to prevent fraud incidences. In my opinion, Sarbanes-Oxley Act has an effect in preventing fraud incidences from occurring. First, it gains people’s awareness of ethical issues and consequences they will face in a company when they are in an ethical dilemma. Thus, the act provides a guide for the direction of managers’ behavior. Second, not only in the WorldCom case, but also in other financial fraud events that occurred during 2001 and 2002, executives should take main responsibilities without question. Therefore, one of the main points is to clear executives’ responsibilities, such as in evaluating company’s internal control. Also, the act increases the criminal responsibilities for executives and white-collars. However, many company and financiers have an opposite attitude towards the Sarbanes-Oxley Act. They argue that some...
Words: 967 - Pages: 4
...abuses of power by decision-makers in business and government. However, whistleblowers may often be wrong in their accusations and their motives are not always pure. Their actions can disrupt a workplace, and may cause serious harm to individuals wrongly accused.But it is not an issue that can be ignored, due to the possible negative consequences for both your employees and your organization I believe that whistleblowing policies can contribute to a just workplace by helping to improve the ethical climate and by helping to ensure that employee rights are respected. Wrongdoing cannot be corrected unless organizational leaders are aware of it. Whistleblowing policies should promote more open communication about sensitive ethical and moral issues. One research study suggests that formal whistleblowing policies do indeed encourage such communication. The policies should make your organization's code of conduct more relevant by making it more likely that violators will be held accountable. A primary goal of personnel policies is the fair treatment of employees. Whistleblowing policies should increase the chances that both whistleblowers and those who are targeted by their accusations will be treated equitably. 2. Leadership can and...
Words: 1411 - Pages: 6
...Are the Dodd Frank Act Whistleblowing Measures Effective? Whistleblowing in the Financial Markets: Name: Professor: Course: Date: In the wake of the Global-Financial Crisis there have been various strategies employed to improve corporate governance, but the main question to ask will they work? The expansion of whistleblower bounties under s.992 of the Dodd-Frank Act 2010 (Dodd-Frank Act) has been one such measure. This measure has been identified as significantly controversial, because it is superseding the traditional internal reporting processes (Schuman & Keating, 2011). The Dodd-Frank Amendment Act that was introduced in 2011 was an attempt to mitigate the potential harm that offering bounties to whistleblowers may have; albeit it seems to be side-lined through consultation processes. Thus, the following research will explore if the bounty provisions are a necessary and effective tool to increase supervision within financial institutions. The concept of “Whistleblower” needs to be identified before moving on in this discussion. The concept relates to a company insider reporting to an appropriate body when there are actions that are breaching the law or acting unethically (Kohn, 2011). Thus, whistleblowing and corporate governance are intrinsically linked. The indications are that the use of monetary incentives is not the most effective model to enforce whistleblowing as an effective deterrent, which can be supported by the poor statistical reception under the...
Words: 2617 - Pages: 11
...legality of the actions undertaken by the paper (BBC News UK, 2013). So to start, what are business ethics and social responsibility? Ethics are not easy to define. They represent a social contract between individuals of a given community, and define what a person ought, and conversely ought not, to do, (Andre & Velasques 1987). However, ethics are not defined by individuals, but rather represent the values of the largest majority. This means that the things an individual values may not be congruent with acting ethically as is defined by the community. This conflict is representative of an ethical dilema. This occurs when an individuals values contradict the behaviour that the code of ethics they belong to dictates they should uphold. A good example of an ethical dilema can be seen in the question: is it right to steal a loaf of bread to feed a starving child? Everyone will come across an ethical dilema at some point in their lives. It becomes very difficult however when we face these dilemas in the business world. In the example given above, the impacts of choosing whether or...
Words: 2910 - Pages: 12
...CHAPTER 8 WHISTLEBLOWING AND EMPLOYEE LOYALTY* Three Mile Island. In early 1983, almost four years after the near meltdown at Unit 2, two officials in the Site Operations Office of General Public Utilities reported a reckless company effort to clean up the contaminated reactor. Under threat of physical retaliation from superiors, the GPU insiders released evidence alleging that the company had rushed the TMI cleanup without testing key maintenance systems. Since then, the Three Mile Island mop-up has been stalled pending a review of GPU’s management.1 The releasing of evidence of the rushed cleanup at Three Mile Island is an example of whistleblowing. Norman Bowie defines whistleblowing as “the act by an employee of informing the public on the immoral or illegal behavior of an employer or supervisor.”2 Ever since Daniel Elsberg’s release of the Pentagon Papers, the question of whether an employee should blow the whistle on his company or organization has become a hotly contested issue. Was Elsberg right? Is it right to report the shady or suspect practices of the organization one works for? Is one a stool pigeon or a dedicated citizen? Does a person have an obligation to the public that overrides his obligation to his employer or does he simply betray a loyalty and become a traitor if he reports his company? There are proponents on both sides of the issue––those who praise whistle-blowers as civic heroes and those who condemn them as “finks.” Glen and Shearer who wrote...
Words: 5589 - Pages: 23
...A Battle Against Cheating When students were at middle school, they were told that the only way to gain success was through hard working. As a student, you should work hard to get good a grade. As an employee, you should work hard to get a promotion. This is a classic American dream: as long as you work hard, you can always achieve your dream no matter what backgrounds you come from. However, reality seems to be disappointed. Working hard is not the only way to get ahead any more. Those who work much harder seem to be less successful than those who work less hard but know how to play tricks. Cheating is a secret weapon that could make you move forward. It is becoming more common, tempting and covert than it was fifty years ago. It is the time to hold our remaining virtues to fight against unethical behaviors. We should identify factors that have led to the phenomenon of cheating and then seek effective ways to conquer it. In their book Final Accounting, Toffler and Reingold (2003) talked about how the world once greatest accounting firm Arthur Andersen cheated together with its clients to mislead investors and eventually collapsed after being disclosed many astounded accounting scandals of the firm. Toffler and Reingold (2003) pointed out that people tend to blame such cheating scandals to a few bad individuals. Whereas, it is the culture that should take the responsibility. It is the corrupting culture that makes cheating an attractive way to get what you want (p.204)...
Words: 3302 - Pages: 14
...Assignment 3: Corporate Governance and Ethical Responsibility Research Paper Due Week 6 and worth 250 points Dr. Do Right has recently been hired as the President of the “Universal Human Care Hospital”, where he oversees all departments with over 5,000 employees and over 20,000 patients at the medical facility. He has been provided with a broad set of duties and oversight of numerous departments, including business development, customer services, human resources, legal, patient advocacy, to name a few. He has managers in each department that he supervises and who work with him to address the needs of the various internal and external stakeholders of the hospital. Dr. Do Right discovers that some patients within the hospital have been dying as a result of a variety of illegal procedures by doctors and nurses, and negligent supervision and oversight on their part. This was brought to his attention in a few meetings and he told his Regional Director Compliance Manager and Executive Committee in January 2009. He was told by them that the matter would be investigated and they would report any findings to him as soon as possible. After two (2) years, there have been no results from the investigation and some patients are still passing away due to the negligent activities. He also answers to a board of trustees and interfaces with numerous community organizations and corporations who have various reasons for doing business with the hospital. Dr. Do Right continues to win awards for...
Words: 1556 - Pages: 7
...these actions is not determined by their consequences. Utilitarianism Actions are judged by how much they benefit the majority. The greatest good for the greatest number of people. It is ethical to make the minority unhappy or suffer to create the greatest good The various ways of defining the greatest good should be taken into consideration. Promulgated by John Stuart Mill and Jeremy Bentham Act Utilitarianism Every act has an individual moral obligation. Rule Utilitarianism Apply utilitarianism to a set of rules that will benefit the majority. Kantian Ethics Intention based The categorical Imperative contains three maxims. Universality: You should only do something if you think it would be ok if everyone did it all the time. E.g. cheating in business, if everyone did it the economy would collapse. Every human should be treated as an end not a means to an end: So you can’t manipulate people to achieve an end. Contrasts to consequentialism which is based on ‘the greater good’. Means you cannot lie, (example about com101 being fav class) Act as if you were the moral authority of the universe: If any action that you undertake, repeated across the universe would create negative effects it is deemed unethical and you should not do it. Whistleblowing WB: Corporate governance codes require people to whistleblow on breaches of the codes. E.g. Enron: Positives: Required by corporate governance to report unethical business actions. Saves...
Words: 2581 - Pages: 11
