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Ethical Theories and Code of Conduct

Discuss about the Ethical Theories and Discourses Ability Expectations.

Cash converters private limited is a retail pawn broking company in Australia. It is the subsidiary of cash converters international limited. It offers some financial loans to the low cost people. This company has many franchises on international level in many countries such as US, Spain, Canada, South Africa and UK.  Basically this company operates in financial services store and second hand goods. It has been incorporated in Perth, Australia in 2007. It is registered in the ASX (Cash converters, 2017). The operations of this company are in 16 countries. Currently there are 2 people as Board of directors. The website of the company is www.cashconvertersasia.com.

It has been found through this case that cash converters one among the top payday lenders in the Australia but due to some issues company had charged a interest rate of 145% on personal loan and 633% on cash loan. Due to such charges the low income customer has been trapped. Due to this decision company has to face many problems such as less market share, decrement in share price, many cases and decrement in total revenue.

Ethical theory is an idea to justify the action done by an accountant. For it, an accountant has to examine all the basis in against and favor of the action. For it accountant has to ask questions to itself such as:

  • Is this action good for the company?
  • Is it good for the society?
  • Would it harm to the society?
  • Do these actions violate the rights of anyone?
  • Have I made any wrong commitment with the company?

Cash converter’s accountant didn’t analyze any of the point mentioned above while preparing the final statements of the company. Company just charged this high interest rate to save itself from further losses and the accountant has hide all the situation faced by the company (Rossouw, Van Vuuren, Ghani & Adam, 2010). Following are some relevant ethical theories to the accountants:

Deontology is the normative ethical position which judges the morality of the action based upon rules. It emphasizes the action not only upon the basis of product. Accountant has totally ignored the main concept of accounting and ignored the main figures while preparing the final statements. 

Right ethical theory depict that all the rights set for the society must be ethically correct and it must be kept by the person on high priority. Accountant has ignored all the ethical concept of accounting and prepared the statements in such a manner that all the negative point of company could be hided (Wolbring, 2012).

Annual Report of Cash Converters

Utilitarianism ethical theory depict that a company must choose the action that offers a great amount of benefit to the most people. Here, accountant has just looked over the benefits of the company (Zadek, Evans & Pruzan, 2013). It ignored the benefits of all the external stakeholders of the company.  

It helps the managers to find the best possible option so that all the issues could be outcome. Accountant had chosen the option through which only the company could get the benefits (Mingers & Walsham, 2010).

Thus it could be said that accountant had didn’t consider any of the ethical theory while preparing the final financial statements.

Through the final reports of the company, it has been analyzed that the profitability of the company it has been analyzed that company has just faced a loss worth $21000 which is not the true figure. Company has faced a high loss in 2015 due to the high interest prices. The revenue of the company has been lowered than before. But the accountant of the company ignored all the accounting standards and rules and regulations and through creative accounting, he presented the totally new figures so that the external stakeholders could be manipulated. The income statement of the company for 2014 and 2015 are as follows:

Income Statement of Cash converters international Ltd as on......

2015

2014

Revenue

374

330

Cost of revenue

138

119

Gross Profit

235

211

Operating expenses

sales, general and administrative expenses

147

137

other operating expenses

97

35

total operating expenses

244

172

Operating income

-9

39

Interest expenses

9

9

Other income

1

2

Income before income tax

-17

32

Provision for income tax

5

11

Minority interest

0

-3

Other income

0

-3

Net income from continuing operations

22

21

Net income from discontinuing operations

0

0

other

0

3

Net income

-21

24

net income available to shareholders

-21

24

This table depicts that how much manipulation had been done by the accountant to provide the fake information to the clients. This ahs been observed that the accountant did the whole work for the benefits of the company. The society benefit had been totally ignored by the accountant. 

Through the final reports of the company, it has been analyzed that the profitability financial performance of the company is not true. Company has showed the total assets worth $441000 in 2015 which is higher than 2014 return. . The performance of the company has been lowered than before (yahoo finance, 2017). But the accountant of the company ignored all the accounting standards and rules and regulations and through creative accounting, he presented the totally new figures so that the external stakeholders could be manipulated. The statement of financial position of the company is as follows:

This table depicts that how much manipulation had been done by the accountant to provide the fake information to the clients. This has been observed that the accountant did the whole work for the benefits of the company. The society benefit had been totally ignored by the accountant.

Social Responsibility and Sustainability

The share price of the company was AUD 0.51 which was quite similar with the last month share price i.e. AUD 0.51. And the share price of Dec 2015 was AUD 0.52. Thus it has been found that the share price of the company didn’t affect due to the fake projection of final statements f the company. The accountant of the company had hided every information from the external stakeholders and thus the share price of the company became similar.

But it has been found that in Dec, 2015, the share volume of the company had been decreased from 17,001,028 to 5,844,047 (yahoo finance, 2017). It depict that the investment of the company had been lowered due to the high interest rate charged by the company. Thus it could be said that the accountant had ignored all the ethical theories but still the stakeholder got to know about the issues in the company and divest their money from the company’s projects.

Social responsibility and sustainability is very important for a business. Following are some social responsibilities which must be fulfilled by the financial institutions as well as cash converter ltd to enhance the position in the society (Branco & Rodrigues, 2006):

An institute must evaluate and classify the investment project in the 3 categories according to the risk and environmental affect (Cuganesan & Khan, 2008). This would help the society to find the best project.

Cash converter must also use this technique to gain the goodwill and a good position back in the society.

A company must assess the social and environmental factors before identifying the risk over any project. This would help the company as well as society for getting more return and save the environment.

Cash converter must also use this technique to gain the goodwill and a good position back in the society.

Financial institute must launch grievance mechanism to resolve the query of client and society (Darus, Mad & Yusoff, 2014). This helps the company to gain the trust of society in company’s operations.

Cash converter must also use this technique to gain the goodwill and a good position back in the society.

Financial institute must charge the interest rate according to the market and customer. The high interest rate could be in disfavor of the company and company could lose the market share.

Conclusion:

Through the case study of cash converters it has been found that the action taken by the accountant of the company was not ethical. Accountant had ignored all the accounting standards, policies, rules and regulations while preparing the final statements of the company. The income statement and balance sheet of the company did not reveal the true facts about the company. 

The share price of the company also did not affect due to the fact that all the information had been hided from the external stakeholders of the company so that the position of the company could not get affect in the market. Financial institutions has also suggested some social responsibilities which must be followed by the companies to  make a good position in the market.

References:

Branco, M.C., & Rodrigues, L.L. (2006). Corporate social responsibility and resource based perspectives. Journal of Business Ethics, Vol. 69(2), pp. 111-132.

Cash converters, (2017). Home. Retrieved as on 1 April 2017 from www.cashconvertersasia.com.

Cuganesan, S., & Khan, H. (2008). Assessing the reporting of stakeholder reciprocity in the Australian banking industry. Journal of Human Resource Costing & Accounting, Vol. 12, pp. 85-101.

Darus, F., Mad, S., & Yusoff, H., (2014). The importance of ownership monitoring and firm resources on corporate social responsibility (CSR) of financial institutions, Procedia - Social and Behavioral Sciences, International Conference on Governance and Strategic Management (ICGSM), Volume 145, 25 August 2014, Pages 173-180

Mingers, J., & Walsham, G. (2010). Toward ethical information systems: the contribution of discourse ethics. Mis Quarterly, 34(4), 833-854.

Morning Star, (2017). Balance Sheet. Retrieved as on 1 April 2017 from https://financials.morningstar.com/balance-sheet/bs.html?t=CCV&region=aus&culture=en-US

Rossouw, D., Van Vuuren, L., Ghani, A. H. A., & Adam, M. Z. A. (2010). Business ethics. Oxford University Press Southern Africa.

Wolbring, G. (2012). Ethical theories and discourses through an ability expectations and ableism lens: The case of enhancement and global regulation. Asian Bioethics Review, 4(4), 293-309.

Yahoo Finance, (2017). Historical Data. Retrieved as on 1 April 2017 from https://finance.yahoo.com/quote/CCV.AX/history?period1=1427826600&period2=1490985000&interval=1mo&filter=history&frequency=1mo

Zadek, S., Evans, R., & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.

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