Question 4
(a) Tucker provides a 5-question model against which ethical decisions can be tested. To be ethically correct, any decision should be:
·Profitable?
·Legal?
·Fair?
·Right?
·Sustainable or environmentally sound?
In this context, the decision by the training manger to decrease the training budget and focus more on personal training using a computer, can be assessed as follows:
Profitable
The decision will decrease the expenditure for the accountancy firm, so in this sense it is profitable. However, there may be a negative impact on staff perception on the importance and method of training. Additional costs may be incurred in recruiting new staff to replace any who decide to leave the company.
Legal
The decision is certainly legal in terms of meeting the training requirements of the firm and the institute. Training hours can be monitored by the software, ensuring that CPD requirements for checking training hours are met.
Fair
It is difficult to determine whether the move is fair. It is fair in terms that all staff will have access to the training as and when it is required. However, it may not be considered “fair” in that traning time will involve unpaid overtime; staff may resent this. Right
It is “right” that the accountancy firm provides appropriate training for its staff.
Sustainable or environmentally sound
The decision appears to be environmentally sound in that there will be decreased travel time and therefore less use of resources involved in travel (e.g. petrol).
(b) (i) Risks must be continually monitored to ensure that they do not adversely affect the organization. Risk monitoring takes place on three levels:
Strategic level
This is the monitoring of risks affecting the organization as a whole. For example, threats such as new competitors and new technologies must be identified on a timely basis and the risk management strategy updated to reflect these changes.
Lack of monitoring at best will result in the organization starting to fall behind competitors in terms of functionality or design of products. At worst, lack of monitoring may threaten the ongoing existence of the organization as the organisation may find that its products are no longer saleable e.g. due to technological obsolescence.
Tactical level
This is monitoring of risks which affect tactical managers. Risks in this category may affect individual divisions or units of the organization, or individual departments depending on how the organization is structured. For a divisional structure lack of monitoring may affect continuity of supply or availability of distribution channels. Not recognizing that a supplier is in liquidation will result in delay in obtaining alternative sources of material.
Risks at this level also include the resignation of key staff which may result in key processes not being completed, e.g. customers invoiced for foods received. Staff motivation should be motivation should be monitored to give early warning of staff leaving.
