Ethics and Channel Stuffing
The IMA’s “Statement of Ethical Professional Practice” spells out the responsibilities of practitioners in the management accounting and financial management fields, for the satisfaction of ethical behavior standards. These responsibilities cover competence, confidentiality, integrity, and credibility components of ethical behavior in such practice. Based on the statement, Maria Tuzzi’s responsibilities involve the duty and obligation to assure operations that promote the four components of ethical behavior in her sales department. As a divisional controller, Maria’s role applies at a supervisory or oversight level. As a member of the management team in a practicing firm with financial management and management accounting concerns, Maria has obligations, towards the community, clients, and her firm’s profession, to ascertain and preserve the highest ethical conduct standards. She has the responsibility to uphold a set of certain principles in the operations and services of her division’s employees, in accordance to this obligation. She has a duty to ensure a suitable level of professional expertise, the satisfaction of relevant laws and standards in the profession, and the availability of decision-support information and communication systems. Under the confidentiality principle, she has an obligation to ensure the confidentiality of information in relevant ways, at the personal level and among staff, and avoid unethical and illegal use of such information. Under the integrity principle, Maria should prevent conflicts of interests in her division’s operations, avoid and prevent conduct with the potential to prejudice ethical service delivery, and avoid action or support for activities that may discredit the profession. In regard to the credibility principle, she has a duty to ensure fair and objective communication of information, the disclosure of all appropriate information that is reasonable and applicable in the division’s operations, and the communication of any inefficiencies and deficiencies regarding the fulfillment of organization policy and the relevant law provisions (IMA, 2005, p. 1-2). These responsibilities aim at ensuring the prevalence of ethical services and management in the division’s operations.
The current problem for Maria involves a violation of some of these ethical provisions. Some of the sales staff’s actions in requesting clients to take sizeable product deliveries before the conclusion of a quarter, with promises of reimbursements for returned products after the quarter’s conclusion, involve attempts to inflate the volumes of their sales for personal quarterly budget gains. The channel stuffing behavior by the staff is unethical as it involves violations of integrity at personal staff member and divisional levels: it has the potential to discredit the firm and the profession among clients and community members. Maria should investigate the incidents comprehensively and establish the guilt of each sales staff member beyond doubt and the motivations behind the behavior. Her action should involve the punishment of guilty staff: the degree of punishment should be proportionate to the committed crime and adequate to prevent similar behavior in the future. Appropriate punishments include demotion, the application of fines and withdrawals of some benefits for the guilty sales staff, and the termination of guilty sales staff’s contracts. Maria’s punishment should involve a case-by-case approach, rather than the deployment of group punishment. Based on each sales staff member’s guilt and part in the inappropriate behavior, she should mete out proportional punishment. Staff with past disciplinary records and those with prominent roles in the present violation should face termination: the others should face fines or demotions (Pravin, 2010, p. 480-499; Zaidi & Lall, 2009, p.270-273). All guilty staff should receive punishment to avoid impunity among sales staff in the future.
Institute of Management Accountants (IMA) (2005). IMA Statement of Ethical Professional Practice. Statements on Management Accounting, Institute of Management Accountants, retrieved on January 16, 2013 from: http://www.imanet.org/PDFs/Public/Research/SMA/IMA%20Statement%20of%20Ethical%20Professional%20Practice.pdf
Pravin, D. (2010). Human Resource Management. Pearson Education, New Delhi, India
Zaidi, S., & Lall, M. (2009). Human Resource Management. Excel Books, New Delhi, India