Ethical Issues and Decision-Making in a Financial Firm: A Case Study Analysis

QUESTION

Case study

You work for a major financial firm headquartered in Melbourne while pursuing your bachelor’s degree at Deakin University. Some of the firm’s values are loyalty, ingenuity, confidentiality, and accountability. The firm’s standards are high. To advance in your career as a tax consultant, you must work hard and effectively and demonstrate cultural fit as you navigate through your probation. You soon realise that the firm has an informal work culture, where new operational staff are socially inducted by mentors. Your social mentor is Sakura, a colleague who has proved to be socially and financially helpful to you.

Your boss, Piccolo, has hinted that the company will soon confirm a few staff members after probation. Piccolo is a director of the firm. In addition to being a registered tax agent, he is also a financial planner. After you share your background information during your first probation review meeting, Piccolo knows you are the primary income earner for your young family. In a private conversation, Piccolo has told you of a pending investigation into some personal luxury vehicles he bought using a client’s funds. These luxury vehicles are under his wife’s name.

Like many other industries, the financial planning industry in Australia is undergoing significant changes. Most of these changes were because of the findings of The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry established in Australia at the end of 2017.

As an aspiring tax consultant, you work to take care of administrative and sometimes client-facing tasks while accompanying Piccolo. You have spent time working and getting to know the employees in each of these roles. At first, you sensed that the staff perceived you as an outsider who posed some threat to internal operations. Nevertheless, with the help of Sakura, the team soon realised that your work was aimed at helping them, and over time you succeeded in creating relationships of trust and mutual respect with many of the employees.

More recently, however, Piccolo has asked you to assist him in restructuring the tax department to cut costs. This information has yet to be made public. You strongly feel that a degree is essential for tax consultants. Piccolo has agreed with you and thinks that long-serving tax consultants need a relevant degree education to retain their jobs. If this happens, staff probation will be confirmed immediately. Operational efficiencies make a strong case for following this strategy.

Following these recent developments within the firm, you have noticed that your relationship with the existing tax consultants has also begun to change. Part of this, no doubt, stems from your hesitance. Knowing that some people will lose their jobs because of your recommendations, you have tried to remain somewhat indifferent, have been reluctant to join in conversations, and have declined invitations to lunch. The information you request and your questions are also beginning to raise suspicions among employees.

After a recent firm’s social event, you receive a call from Sakura. Based on your previous work relationship, she begins by telling you she can trust and confide in you. Sakura then reminds you how vital tax planning is for businesses and that she has just enrolled on a bachelor’s degree course to update her qualifications. She feels comfortable with this current job as she can pay for her education and care for her disabled sister.

Sakura tells you that, as Piccolo is leaving the firm at the end of next month, the office is full of rumours that, due to a restructuring, some staff will lose their jobs. She explains that there are few vacancies in the industry and that she is worried about losing her job. She then tells you she knows of another vacancy with lower pay and fewer benefits than her present position. She concludes by asking: “Am I about to lose my job?” “Should I pursue this other job?”

You are now concerned about what to do next.

1. Identify and discuss the ethical issues or dilemmas present in the case study.

2. Four ethical decision-makings models are covered in MAA250:

Langenderfer and Rockness Model (Cull et al. 2021) / The American Accounting

Association (AAA)

Decision Making Model (Hartman et al. 2020)

Good Decision-Making Model (Longstaff et al. 2020)

The Moral Intervision Model

Which one of the four ethical-decision making models has your group chosen to analyse this case study? Justify why your group chooses this model (as opposed to the alternate models) as the approach to resolve the ethical dilemma.

ANSWER

Ethical Issues and Decision-Making in a Financial Firm: A Case Study Analysis

Introduction

This case study revolves around an individual working in a major financial firm in Melbourne who is pursuing a bachelor’s degree at Deakin University. The firm places high importance on values such as loyalty, ingenuity, confidentiality, and accountability. The protagonist is faced with a series of ethical issues and dilemmas that require careful consideration and ethical decision-making. In this essay, we will identify and discuss the ethical issues in the case study and then delve into the chosen ethical decision-making model, explaining why it is the most suitable approach to resolve the ethical dilemma.

Ethical Issues in the Case Study

Confidentiality and Trust: The first ethical issue is the breach of confidentiality by the director, Piccolo, who disclosed his involvement in a potential fraud case to the protagonist. This raises concerns about trust and ethical conduct within the organization. The protagonist must decide whether to report this breach or remain silent.

Probation and Job Security: The impending confirmation of staff after probation creates a dilemma related to job security. The protagonist is aware of the restructuring plan to cut costs, which may lead to job losses. This knowledge creates a moral conflict between loyalty to the firm and concern for colleagues’ job security.

Educational Qualifications: The protagonist believes that a relevant degree is essential for tax consultants. This stance could impact long-serving consultants’ job security if they are required to meet new educational requirements. The ethical issue here involves determining the fairness of this requirement.

Changing Relationships: The protagonist’s reluctance to engage with colleagues and declining social invitations is causing a shift in their relationships with existing tax consultants. This raises concerns about maintaining professionalism and ethical behavior in the workplace.

Disclosure of Insider Information: Sakura, the protagonist’s mentor, discloses her fears about potential job loss due to restructuring. The protagonist must decide whether to disclose confidential information about the restructuring plans to Sakura, which could affect her career decisions.

Ethical Decision-Making Model

The ethical decision-making model chosen to analyze this case study is the Langenderfer and Rockness Model (Cull et al., 2021) / The American Accounting Association (AAA) Decision Making Model. This model consists of seven stages: identification of the ethical issue, gathering of relevant information, identification of stakeholders, considering available alternatives, evaluating the ethical implications of each alternative, making a decision, and implementing and monitoring the decision.

Justification for Choosing the AAA Decision Making Model

Comprehensive Approach: The AAA Decision Making Model provides a structured and comprehensive approach to ethical decision-making. It covers all the essential steps required to analyze and address the ethical dilemmas present in the case study.

Consideration of Stakeholders: This model emphasizes the identification of stakeholders and encourages the consideration of their interests and perspectives. In this case study, there are multiple stakeholders, including the protagonist, Piccolo, Sakura, other employees, and the financial firm itself. Considering their interests is crucial in making ethical decisions.

Evaluation of Alternatives: The model prompts the evaluation of multiple alternatives and their ethical implications. Given the complex nature of the dilemmas in this case study, a systematic approach to assessing different courses of action is vital.

Implementation and Monitoring: The final stages of the model emphasize the importance of implementing the decision and monitoring its outcomes. This ensures that the chosen ethical path is followed through and any necessary adjustments are made.

Conclusion

The case study presents a multitude of ethical issues, including breaches of confidentiality, job security concerns, changing relationships, and disclosure of insider information. To address these dilemmas effectively, the Langenderfer and Rockness Model / AAA Decision Making Model has been chosen as the most suitable ethical decision-making approach. This model offers a structured framework that considers stakeholders, evaluates alternatives, and emphasizes implementation and monitoring, making it a valuable tool for navigating the complex ethical landscape in the financial firm’s environment.