Business Finance - Management Week 10 Assignment- Account for Management Decision

2

Organizational Performance Analysis and Recommendations – Part 2

Lakenya Campbell Walden University

MBAX-6050 Dr. Schmidt October 26th, 2025

Ethical Responsibilities

Upon evaluating both investment options, the Copper Company should maintain ethical requirements of compliance and integrity of data. As the regulatory inspection and possible punishment become stricter, there is the need to maintain ethical management in a bid to have sustainable operations. Managerial accounting results in ethical conduct, obedience, continuity of the company while maintaining trust of the stakeholders, and long-run economic profitability.

Importance of Ethics in Managerial Accounting

Ethical behavior holds the basis of managerial accounting that establishes organizational credibility and financial transparency as its base. It incorporates such standards as integrity, objectivity, and professional competence that contribute to providing employees with the opportunity to make good and legal financial choices (Franklin et al., 2019). The Institute of Management Accountants (IMA) reiterates these values to call on the accounting professionals to be upright and precise in relation to the financial reporting.

Abiding by the ethical standards assists in sustaining the trust of the stakeholders in that they ensure they have the relevant knowledge to formulate reasonable objectives. Similarly, clear records allow proper cost prediction, investment rating, and compliance with the regulations. On the other hand, unethical practices, such as data manipulation and misconduct of noncompliance, negatively affect management decisions and threaten their financial stability. False declarations of emissions can escape the process of scrutiny in the short term; however, this may lead to punishment, tarnished reputation, and loss of organizational credibility in the long run.

On the same note, ethics fill in the profitability as well as the responsibility gap. The ethical companies are more likely to win the loyal investors and customers who appreciate transparency, which, consequently, facilitates profitability and competitive edge (Byars and Stanberry, 2018b). Hence, effective sound managerial accounting practices based on ethical considerations can be the root of credible corporate governance.

Organizational Impact of Ethical and Unethical Behavior

Business ethics are not only restricted to legal and ethical compliance, but also, they affect all the areas of organizational performance. Ethical practices also develop a culture of accountability, which encourages the employees to be responsible and work in line with the corporate values. Unethical behavior, on the other hand, kills internal morale and outside relations. Workers who are subjected to fraud or falsification of data tend to lose their motivation, and this could lead to turnover and a decline in productivity.

Financially, the lack of proper ethics in business may cause short-term and long-term losses. The risk of the regulatory penalty of up to 1000 dollars/day shows how the lack of honesty or timely response to the reports on compliance can be used to directly compromise profits. Moreover, stakeholders are likely to avoid investing if a reputational loss may occur once an organization is regarded as unreliable, and this may ruin the relationship with suppliers. As Gottschalk (2019) points out, the reputation of Fuji Xerox was destroyed due to unethical accounting, and the lack of investor confidence and the rise of oversight costs followed. Hence, unethical behaviors have both actual and non-actual consequences, which go beyond financial records.

Ethical behavior, however, leads to the realization of high achievements of goals in the company. By being honest, the management inspires employees to report discrepancies, audit, and get committed to objectives. The organization is perceived as credible by customers and the regulators, and it creates goodwill and long-term stability. Additionally, ethical decisions create sustainable profitability by decreasing the legal risks and gaining the trust of people. Therefore, robust ethics enhance efficiency, stakeholder relationships, and buoyancy during reputational crises.

Recommendations to Strengthen Ethical Responsibility

The following measures should be implemented in order to instil ethical responsibility throughout the organization.

1. Formal Ethics and Compliance Program.

Implement a written Code of Ethical Conduct that is consistent with IMA standards, make ethics training mandatory at least periodically for all employees and supervisors, and publish disciplinary procedures. Environmental reporting needs to be highlighted in training and the legal implications of falsifying (Walden University, LLC, 2024). Besides this, incorporate scenario-based modules that show rationalization of misconduct and how to resist.

2. Independent Oversight and Dual Authorization.

Form an Ethics and Compliance Committee comprising executive finance board, operation, and environmental representatives. Demand bilateral approval of each regulatory filing and periodic external audits by an independent company of emissions and other financial statements. This multi-layered measure improves the degree of control and responsibility and corporate relations with authorities.

3. Whistleblower Protections and Confidential Reporting.

Combine non-punitive, confidential, and non-retaliatory reporting systems. These avenues must be deployed in the regular discourse of communication to ensure that the employees are aware of how to frame their issues correctly. On the same note, credited reports must be timely and autonomously investigated, and correct resolutions checked and taken.

4. Ethical Performance Metrics and Incentives.

Use ethical standards on performance appraisal and remunerating the executive. As an illustration, internal reporting and rates of audit errors are evaluated through timely and correct reporting of regulators. The incentives are channelled towards ethical performance and, in the process, discourage the urge to give false reports, thus creating an environment of rewarding honesty.

Moreover, the management is expected to model ethical behavior; it should serve as a good example to employees and remind them that honesty and integrity are more important than immediate gains. Hayes and Broughton (2014) confirm that ethical organizations are built bottom-up, and therefore, managerial commitment supports the initiative.

References

Byars, S. M., & Stanberry, K. (2018a). Introduction. In Business ethics. OpenStax. https://openstax.org/books/business-ethics/pages/1-introduction

Byars, S. M., & Stanberry, K. (2018b). 1.1 Being a professional of integrity. In Business ethics. OpenStax. https://openstax.org/books/business-ethics/pages/1-1-being-a-professional-of-integrity

Byars, S. M., & Stanberry, K. (2018c). 1.2 Ethics and profitability. In Business ethics. OpenStax. https://openstax.org/books/business-ethics/pages/1-2-ethics-and-profitability

Franklin, M., Graybeal, P., & Cooper, D. (2019). 1.4 Describe the role of the institute of management accountants and the use of ethical standards. In Principles of accounting, volume 2: Managerial accounting. OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/1-4-describe-the-role-of-the-institute-of-management-accountants-and-the-use-of-ethical-standards

Gottschalk, P. (2019). Evaluation of fraud examinations: The case of inappropriate accounting practices at Fuji Xerox. Deviant Behavior, 40(11), 1421–1427. https://doi.org/10.1080/01639625.2018.1559640

Hess, M. F., & Broughton, E. (2014). Fostering an ethical organization from the bottom up and the outside in. Business Horizons, 57(4), 541–549. https://doi.org/10.1016/j.bushor.2014.02.004

Walden University, LLC. (2024). Unethical accounting practices [PDF]. Walden University Canvas. https://waldenu.instructure.com