Regardless of the size of a business or company, being a manager requires a certain
set of personal characteristics. Amongst the largest of these characteristics is
trustworthiness. According to an article in the Journal of Public Administration
Research & Theory, trustworthiness is the culmination of three factors; those
factors are competence, benevolence, and integrity (Cho & Ringquist, 2011). A
manager’s trustworthiness is severely diminished if one or more of these
characteristics are lacking. This is what makes the situation regarding Anton Blair
troublesome.
When Mr. Blair suggests that the controller reduce the estimate of doubtful
accounts at the end of the year it has the potential to set off a chain reaction of
misinformation. Our text states that reducing the estimate of doubtful accounts
would end up causing the net income to appear higher because the Bad Debts
Expense account will be less than it should. Also, this adjustment would result in the
balance sheet displaying the lower allowance, which would lead the company to
believe that they have a higher amount of current assets be (Wild, Shaw, &
Chiappetta, 2013).
The abilities of a manager allow company heads to entrust managers with decision-
making responsibilities. As such, it would not be surprising for a manager to have
the authority to apply alternate accounting procedures. However, as stated in the
beginning of this response, integrity is an integral component of trustworthiness. It
is the lack of integrity that makes his suggests cross the line of ethical. The
manager’s motives are for self-benefit; his compensation is based on the net
income of the company. As a manager Mr. Blair is privy to the year-end financial
figures and when he sees that his bonus is not going to be what he expected or
wants, he makes the suggestion to reduce the estimate of doubtful accounts, as was
explained in an earlier paragraph, this suggestion makes it appear that the net
income for the company is higher. To reiterate, higher company net income –
higher compensation for Mr. Blair. There does not seem to be any other
justification for altering the estimate of doubtful accounts.
These types of recommendations or suggestions could go unchecked for some time
if the company did not institute internal controls. While the owner would need to be
able to trust the manager in order for them to handle decision-making skills, that
trust does not take the place of the owner being involved in some way when it
comes to the financial situation of the company. As an owner they should have some
understanding of accounting principles and from time to time go over the financial
figures, especially at the years end. In business, the term audit tends to have a
negative connation to it; however, a periodic audit of finances would be able to
pinpoint any holes in the company’s finances. I would also think that the controller
would be suspicious of the manager’s suggestion since they are very knowledgeable
in accounting principles and would know instantly the effect that estimate would
have.
The bible tells us in Proverbs 28:6 “Better is a poor man who walks in his integrity
than a rich man who is crooked in his ways” (English Standard Version). Mr. Blair is
the epitome of the man who is crooked in his ways. The riches that he will reap will
not hide the sins he has committed. His choice of the unrighteous path is also not
bringing glory to God. By walking in integrity we will receive riches much more
valuable than that of money and we are also able to be a greater blessing to the
world, all in Christ’s name.
