The Travel Expense Billing Controversy
The Travel Expense Billing Controversy
Neal A. Roberts, an employee of PricewaterhouseCoopers (PwC) found out that his employer was earning millions of dollars a year by way of a billing method that he thought was doubtful. PwC had been collecting large rebates on airline tickets and other travel expenses being charged as expenses to clients of the firm. These rebates were not being returned to the firm’s clients in the form of savings, but the firm was keeping these rebates for it.
This was working, because the firm would bill the clients for the full price of airline tickets and other travel-related expense, but privately, the firm negotiated discounts and rebates that they then got at the end of the year based upon total amounts spent. The clients did not know anything of the back-end discounts and rebates the firm was getting; therefore, they were being charged more than the firm’s true out-of-pocket expenses for the items. In October 2001, the firm finally stopped taking airline rebates completely.
The company started structuring all discounts as front-end price reductions that would be passed on to the clients. In the professional environment, there are two main areas in which ethical behavior is required. The first point concerns the behavior of the employee at work, in dealing with colleagues, with supervisors and subordinates and also with customers, the second point concerns the behavior of the company itself against its customers, its employees and all others who may are concerned from company. Also you have to distinguish between descriptive and normative ethics. Descriptive ethics is concerned with describing, characterizing, and studying the morality of a people, an organization, a culture, or a society. […]
It focuses on “what is” the prevailing set of ethical standards in the business community, specific organizations, or on the part of specific managers. […] Normative ethics is concerned with supplying and justifying a coherent moral system of thinking and judging. […] It deals more with “what ought to be” or “what ought not to be” in terms of business practices. Carroll, Buchholtz, 2008:242,243) So it’s rather impossible for a large company such as PwC to adhere to all these ethical values. These values can be quickly lost in the general public, because everywhere, they are trying to make money and advance the business, whether this ethical behavior is observed or ignored. Neal A. Roberts was constantly trying to uncover the corrupt business of the company, because he has a higher ethical consciousness and does not want PwC to get away with its wrong behavior. Identify the ethical issues in this case.
There are three ethical issues in this case. Firstly the cheating on customers out of discounts. The firm PwC earns millions of dollars on rebates, which are not being returned to the clients in form of savings, but rather, the firm was keeping these rebates for themselves. The second ethical issue is that PwC is giving false information to the firm’s clients, by telling them a wrong amount for the airline tickets and other travel expenses. The last ethical issue is the cover-up of the firm’s corrupt activity.
The company PwC does not tell their clients and their employees about the firm’s illegal behavior. All these ethical issues belong to the organizational level (or firm level). “[…] These issues may carry consequences for the company’s reputation and success in the community and also for the kind of ethical environment or culture that will prevail on a day-to-day basis at the office. In addition, how the issue is handled may have serious organizational consequences” (Carroll, Buchholtz, 2008:289,290). [A] survey conducted by the Ethics Resource Center reveal what managers and employees are up against. ” There you can see, that 19 percent of the asked employees mentioned “lying to employees, customers, vendors, or the public” (Carroll, Buchholtz, 2008:290) is one of the most “questionable practices that employees today face in their work lives” (Carroll, Buchholtz, 2008:291). Who are the stakeholders and what are their stakes? The Stakeholders in case 14 are the customers, the federal government, the company PwC, the partners in business and the employees.
The customer’s stakes are to get the right service for the money they paid, to get good quality and to be treated honest and fair. But in this case the customers are not getting the rebates that they should be rewarded. Furthermore the stakes of the federal government are that the company PwC can pay the taxes and acts legally and ethically. However, the federal government was not only lied to about speculations and regulations, but they were also lied to as the customers themselves. Moreover the stakes of PwC are that they can keep on the market with the other companies, that their employees are motivated nd make a good work, that their company is creditworthy, so in other words liquidity is given, that they have many customers and good conditions for suppliers. The stakes of the partners in business are that they want to know how the competitive company PwC is in the market and how big their market shares are. But the other businesses are getting tarnished. At last the employee’s stakes are to work in a nice working atmosphere, to get fair wages and also to be treated honest and fair.
What is your appraisal of the ethics of the travel expense billing practices described in the case? What are the ethical arguments for and against them? My appraisal of the ethics of the travel expense billing practices described in the case is what the company PwC did is wrong, because it is not right and fair. They violate consumer rights, employee rights and shareholder rights by offending against the main ethical principles, such as the “Respect for Persons”, the “Principle of Beneficence” and the “Principle of Justice”.
In this connection ‘Respect for Persons’ means that individuals should be treated as autonomous agents and that persons with diminished autonomy are entitled to protection. Further the ‘Principle of Beneficence’ indicates that “persons are treated in an ethical manner not only by respecting their decisions and protecting them from harm, but also by making efforts to secure their well-being. [… ]Two general rules have been formulated as complementary expressions of beneficent actions in this sense: (1) do not harm and (2) maximize possible benefits and minimize possible harms.
As with all hard cases, the different claims covered by the principle of beneficence may come into conflict and force difficult choices. ” Moreover the ‘Principle of Justice’ says that “[…] equals ought to be treated equally. ” (http://www. stmarys-ca. edu/institutional-review-board/basic-ethical-principles) The company’s behavior meets the basic level of the CSR pyramid, which says “be profitable”, but on the other side it goes against legal, ethical and philantropical responsibilities. […] In most decisionmaking situations, ethics, economics, and law become the central expectations that must be considered and balanced against each other in the quest to make wise decisions” (Carroll, Buchholtz, 2008:249), but in this case, the company does not obey this rule. PwC only refers to the ethical basis “be profitable” and ignores the other responsibilities, which makes the whole behavior of the firm illegal and not ethical.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 7 October 2016
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