Ethical Dilemma – Ethical Considerations in Budgeting

Ethical Dilemma – Ethical Considerations in Budgeting

Honesty is an important virtue in any budgeting process. If the information presented doesn’t reflect the actual expected expenditure for the period in question, then it’s unlikely the budget will be in line with the ethical principle of integrity. In the JB Industries case, managers tend to inflate their budgets by 10% so that their actual cost would be less than the budget amount. Expenditure that falls below the budget attracts bonuses for the managers (Needles, Powers, & Crosson, 2013). The budget presented by Keynes for his department exhibited a 20% increase in forecasts, raising concerns from the budget committee. Upon questioning, Keynes argued that this rise was attributed to the projected increased activity for the proceeding year. Keynes lied since the actual reason for the budget increase was to earn a bonus by spending less than the budgeted amount.  He was acting unethically since he lied to the budgetary committee about the actual spending.  Keynes’s deceit manifests twice: when he overstated the budget and when he defended it. A manager’s ethical duty is truthful reporting, which Keynes failed to fulfill (Griseri & Seppala, 2010). Alternatively, Keynes should seek honest ways of earning bonuses, such as cutting down on unnecessary spending and seeking discounts when procuring supplies for his department.

“Bread gained by deceit is sweet to a man, but afterward, his mouth will be full of gravel” (Proverbs 20:17, KJ). The Bible discourages us from dishonesty and warns of its consequences. The phrase that ‘afterward his mouth will be full of gravel’ illustrates the repercussions resulting from presenting false information. If it’s proven that Keynes’s budgetary reports are deceitful, he might end up in trouble. Evidence may be presented to the board of directors regarding his inflated statements, resulting in serious consequences like retrenchment or, worse, a jail term. With a bad reputation from a previous employer, Keynes would find it hard to secure another job if retrenched or lose his freedom if convicted of a jail term.

References

Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility. Cengage Learning.

Needles, B. E., Powers, M., & Crosson, S. V. (2013). Financial and managerial accounting. Nelson Education.

Version, K. J. (2017). Holy Bible. Arcturus Publishing Limited.

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Ethical Considerations in Budgeting

Review Chapter 20, Ethical Dilemma Case 2.  Respond to the two questions posed:

• What do you think are the real reasons for the increase in the budgeted amounts?
• What ethical considerations enter into this situation? That is, was Joakim acting ethically?

Review the biblical passages provided in Biblical Perspectives throughout the course (or from your own research), and discuss what the Bible tells us to do when we are in similar situations as Joakim. After posting your initial response, respond to two of your classmates’ posts.