Question

1. You are the new Finance Director for a large, closely held business. The owners are all family members and the business employ around 300 people from the community. You have discovered that several of the family members are being paid cash and not through the regular payroll system. You also suspect that these cash payments are due to these people being employed illegally. You are instructed that, when preparing annual tax filings, the payments to illegal workers and cash payments to family members should be not reported to the IRS because what they don’t know won’t hurt them.

Which of the standards will be most relevant to solving this ethical dilemma? Select all that apply.

1. Integrity
2. Credibility
3. Competence
4. Confidentiality

Answer 1

Answer

The standards will be most relevant to solving this ethical dilemma is

Integrity

Credibility

Competence

As the business is owned by all the family members it has violated the principle of integrity because they have mitigated their personal interest and the cash is paid to them without properly recording through payroll system. No such act must be performed so as to harm the credibility of business which company is running. Competence standard is also relevant because according to this standard one must perform his duties in accordance with relevant laws and regulations which have been prescribed. By making payment to illegal workers and cash payment to family members without disclosing to IRS has also violated Competence standard.