Question

Ethical Issues "Josey," Jordan asked with a puzzled look on his face. "I don't understand these regression results for our mixed costs." "What seems to be the problem?" Josey asked, looking over his shoulder at his spreadsheets. "Well, I used direct labor hours, like you said, and it seems to be a great driver for cleaning supplies and a pretty good driver for parts and repairs, but it isn't a good driver for our utilities bill." "What's wrong with that?" "Well, I would have expected our utility bill to be pretty constant. I mean, the lights are pretty much always on, the water usage is pretty constant, and none of our machines are that energy intensive. So, why is it jumping around so much?" "Well," Josey said sitting down in a nearby chair. “The utility bill itself is pretty constant. But I use the utility expense account as kind of a 'miscellaneous expense' Any time I have to buy miscellaneous items for the office, or when we have an office party for a holiday or celebration, I just debit utilities expense." "Why?" Jordan asked, obviously confused. "Well, for one thing it's easier. For another, no one really looks at utilities expense, so I don't have to spend a lot of time explaining those costs." "Doesn't that mess up our numbers and our budgets?" "Not materially. Because the cash flows are all accounted for and since everything balances, I just decided that it wasn't worth my time, not with everything else I have to do with only you to help me."

write a memo that have an opening paragraph that briefly states the issues, a second paragraph that gives detailed facts and a concluding paragraph that gives your recommendation. The memo should give the facts only and should not "blame" anyone. Avoid using adjective, pronouns, names, etc. Just state the facts. Address the memo to Dr. Hucks. The memo should be no longer than two pages.

Answer 1

Ans.

MEMORANDUM

TO: Dr. Hucks

DATE: 08-01-2020

SUBJECT: Ethical Issues

1. I'm writing to attract your kind attention towards the increasing amount of unethical workplace etiquettes.

As our company continues to grow with the growth of the society. There has been an increase in the demand for our products in the market. The customer satisfaction has reached to its fullest.

Please let me know if you have any questions. In the meantime, I'd really like to attract your attention towards the Accounting and Finance functions of the company. There have been some anomalies in the way books are maintained in the company.

2. The main issue being the increase in utility expenses of the company. On research, it has been found that all the miscelleneous expenses are being debited to the utility account thereby causing the utility account to inflate. Any time someone has to buy miscelleneous items for the office, or when we have an office party for holiday or celebration, they just debit the utility account thereby causing a distorted figure of the utility account.

3. I'd really like your goodself to look into the matter and raise the issue to the higher authorities. I'd appreciate your cooperation during this time.