Ethical Business Issues and Solutions
This business report focuses on a case study of a doctor whose firm has been committing white-collar crimes. It presents the accounting officer’s ethical dilemma and an analysis of available options. It also justifies why the fraud committed is a white-collar crime. It also suggests the possible optimum alternative that can be taken to salvage the situation. The report also recommends how people should conduct themselves professionally to overcome ethical dilemmas and avoid committing crimes.
Businesses often face tempting instances to commit white-collar crimes in their day-to-day operations (TAŞTAN, 2019). When they fall into the temptations, it leads to their finance and records team being challenged to choose between being ethical by bringing the wrongdoings to light or swimming through the fraudulent waves of their employers. This business report will focus on a case study of a white-collar crime committed at a clinical business. It will also analyze the ethical dilemma posed to the accounting officer. This analysis will form the basis for the officer to develop the best solutions to solve the puzzle.
Saul’s Ethical Dilemma
An ethical dilemma, also called an ethical paradox, is the challenge of decision-making to choose between two or more alternatives (Figar & Đorđević, 2016). The possible options are neither ethically acceptable in their different ways. Ethical dilemmas are usually complicated, although they seem to have a straightforward solution. The idea behind solving such dilemmas is to emerge with the optimal option among the competing alternatives (Forester-Miller & Davis, 2016). Often in such dilemmas, some options are morally right while others are relatively immoral. The alternatives have a consequence for the decision-maker, which is mostly unpleasant.
In this case, Saul is faced with an ethical business dilemma that he does not have an option but to solve. The dilemma has presented him with the challenge of exposing Dr Robert Smith to the authorities and Medicaid for two mistakes. The first mistake is that Dr Robert Smith has been charging Medicaid for patients who are not their target beneficiaries, who are supposed to be low-income earners. Secondly, he has been double charging the patients by getting payments from both the patients and Medicaid. This can be termed professional fraud, which is punishable by law (Bennett, Levinson, & Hioki, 2017).
This means that if Saul decides to report the matter to the authorities and Medicaid, his brother may suffer a jail term which maybe leads to the collapse of the business. This will consequently lead to his brother losing the progress of his dream of becoming a heart surgeon. The family may also hate Saul for exposing his brother, who gave up on his dream career to stay with the sickly dad and the townspeople. Therefore, this decision would leave Saul tainted as enemies to his family and the entire town.
On the other hand, if Saul decides to keep it a secret and solve the matter with Dr Smith, the habit may continue as a normal thing. Consequently, Medicaid may learn about this fraud being committed at the business during their audits. This time, the mistake will be attributed to Saul, who oversees records. This discovery may lead him to imprisonment and revoke his practising license. This would render Saul a fraud and unethical in his career. This situation is, therefore, an ethical dilemma for Saul, in which he has no option but to choose between the two alternatives, which have bad consequences for him.
Why Medicare Fraud is a White-Collar Crime
The term white-collar crime has recently been used in sociology, criminology, politics, and business. The term is, however, used in substantive criminal law (Victoria, 2019). The question is what white-collar crime is and which cases should be considered white-collar. It is worth noting that in the newly enacted Sarbanes-Oxley Act, which has been among the most vital sections of the federal criminal law legislation for many years, this term takes a notable appearance and importance.
The definition of white-collar crime is highly contested among criminal law scholars, sociologists, and other social science scholars (Reurink, 2016). Most scholars define it according to their field and analytical bias. Despite the differences in definitions, there are a few similarities in all. General observation shows non-violent white-collar crime is committed for financial gain (Chen, 2020).
With the general observation of white-collar crime being a non-violent fraud and having a financial gain to the fraudulent person, the crime committed by Dr Smith in the case study may be considered white-collar (Gottschalk, 2016). This is because he did not forcefully or violently attack the patients and clients to pay their bills double, nor did he attack Medicaid to pay out the bills for patients who had already paid in cash.
Secondly, this fraud, as said in the case study, and revealed by Saul, has earned Dr Smith $75,000, which is a huge financial gain to him. This white-collar crime committed by Dr Smith can be categorized as corporate fraud. This involves an exaggeration of figures by the business with the aim of financial gain. The case study shows that Dr Smith presented exaggerated invoices and statements to Medicaid for them to consider paying his business. This has been a common crime committed by private health facilities against clients and health insurance schemes in different countries (Miller, 2013).
How Saul Should Approach the Situation
Being a professional accountant requires accounting expertise and the ability to uphold ethical business and reporting. Many accountants are in their career faced with ethical dilemmas to serve the interests of their masters, that of the authorities or the public (Steenwijk & Gould, 2019). A competent accountant should be able to stand by ethical business procedures and business reporting. This is not only because they are expected to have a moral standing but also because they may be left liable for a mistake done by the firm and consequently be charged with white-collar crime.
In the case study provided, Saul has two options that he can choose from. They all harm him. They include; reporting his brother for the crime committed and seeing him suffer a jail term and keeping the fraud unknown to anyone else, and hoping that no one finds out, which will be a risk of him being jailed in case it is found out. However, the family may suffer the loss of their son to a jail term. This presents a need for Saul to be analytical about his decision.
To develop the optimal alternative, Saul should adopt an approach that will leave him with only one option with the least economic evil and the greater good for all the affected parties. In adopting the value theory approach, both alternatives seem to have equal effects on him and the family (Corporatefinanceinstitute.com). This leaves him with an option to find another alternative besides these two because this is a dilemma in which another solution can be considered.
Saul should, therefore, make Dr Smith understand the negative consequences the crime may bring to the family. Then he can advise him to present the records to Medicaid as an accidental mistake and then pay the overcharged amount. This would settle the issue and gain confidence in Medicaid for being honest. Considering the behaviour of Dr Smith portrayed in the case study, of arrogance and leaving Saul stranded, wondering what to do, it is much expected that he will ignore the advice. If this happens, Saul should resign and save himself from the mess, and this would make Dr Smith sort out the mess since employing another person with no family ties with him will be easier for him to e expose (Liao, Kwan, & Li, 2015).
- Many people have, in one or more instances, been faced with an ethical dilemma in their professions and businesses. People should always hold onto the ethical alternatives that are available. This will champion moral business operations.
- Business owners often face numerous chances and temptations to commit white-collar crimes. They should always overcome the temptation as it has a short-term financial gain but can cost the loss of the entire venture and jail term, and a tarnished reputation.
- Professionals, especially accountants and auditors, often face an ethical dilemma. They should always stay firm in professionalism and ethical operations. This will, in a big way, reduce the economic crimes recorded worldwide and promote professionalism in companies.
There are always those instances in everyone’s professional undertakings when they are faced with an ethical dilemma. This calls for always being analytical in whatever they do in their professions. This helps people in choosing options and solutions which have the optimal benefit to every party involved. In conclusion, the ethical business will always have a longer life than that of fraudulent practices. Always choose the former.
- Bennett, M. W., Levinson, J. D., & Hioki, K. (2017). Judging Federal White-Collar Fraud Sentencing: An Empirical Study Revealing the Need for Further Reform. IOWA LAW REVIEW [Vol. 102:939, 939-1000.
- Chen, J. (2020, May 10). White-collar Crime. Retrieved August 1, 2020, from Investopedia.com: httap://www.investopedia.com/terms/w/white-collar-crime.asp
- Corporatefinanceinstitute.com. (n.d.). Ethical Dilemma. Retrieved August 1, 2020, from CFI Education Inc: https://corporatefinanceinstitute.com/resources/knowledge/other/ethical-dilemma/
- Figar, N., & Đorđević, B. (2016). MANAGING AN ETHICAL DILEMMA. ECONOMIC THEMES (2016) 54(3):, 345-362.
- Forester-Miller, H., & Davis, T. E. (2016). Practitioner’s Guide to Ethical Decision Making. Retrieved August 1, 2020, from American Counselling Association: http://www.counseling.org/docs/default-source/ethics/practioner’s-guide-to ethical-
- Gottschalk, P. (2016). Investigating Fraud and Corruption: Characteristics of White-Collar Criminals. Journal of Forensic Sciences & Criminal Investigations 1(2): JFSCI.MS.ID.555560 (2016), 1-7.
- Liao, Y., Kwan, H. K., & Li, J. (2015). Work-Family Effects of Ethical Leadership. Journal of Business Ethics Vol 128 No. 3, 535-545.
- Miller, A. (2013). White coats and white-collar crime. Canadian Medical Association Journal, January 8, 2013, 185(1), 19-20.
- Reurink, A. (2016). From elite lawbreaking to financial crime: The evolution of the concept of white-collar crime. MPIfG Discussion Paper, No. 16/10, Max Planck Institute for the Study of Societies, Cologne, pp. 1-31.
- Steenwijk, E., & Gould, S. (2019, June 6). Dealing with ethical dilemmas with confidence. Retrieved August 1, 2020, from International Federation of Accountants: https://www.ifac.org/knowledge-gateway/building-trust-ethics/discussion/dealing-ethical-dilemmas-confidence
- TAŞTAN, S. B. (2019). White-collar criminals and organizational criminology: Theoretical perspectives. In S. B. TAŞTAN, Ethics in Research Practice and Innovation (pp. 296-322). Istanbul, Turkey: IGI Global Global Publishing.
- Victoria, A. (2019). White-Collar Crime. DOI: 10.13140/RG.2.2.19821.64483, 1-8.