Ethics and Internal Controls: A Case of Entertainment Expenses Harvard Case Solution & Analysis

A Case of Entertainment Expenses

Question 1

Ethical practice is a set of principles that expresses values, and standards that guide our conduct. The principles include Honesty, Fairness, Objectivity, and Responsibility.

The set of relevant standards are Competence, Confidentiality, Integrity and Credibility. The employees of the company should act in congruence with these principles, and also encourage other employees to act in accordance with these principles;however this is not the case in most occasions where employees take unethical decisions due to different reasons.

Violation of Principles and Standards:


The Salesperson of Region A has violated the principle of Honesty, which requires truthfulness in all analyses and communications. The salesperson of Region T, who lied about holding dinner meetings with clients however no client attended the meetings and the salesperson was treating his sales staff, is an example of violating the ethical principle of Honesty.


The second issue is related to salesperson from Region J. In this issue, the salesperson violated the ethical standard of credibility, which requires the information to be communicated fairly and disclose all the information that the Salesperson failed to do by taking her neighbors to the Ski trip without informing anyone and by running all the expenses through the company, which violated the standard of credibility.


Third issue is related to the tickets to events and concert where a staff member bought the tickets of NFL instead of concert and used them for personal benefits rather than for customers. It violates the ethical standard of integrity because the staff member didn’t mitigate the conflict of interest, and involved in the act which stopped him from performing his duty ethically.


Objectivity is not allowing bias, influence of other people and conflict of interest to override the professional judgment. The Salesperson lied about the expenses, which were related to gentlemen’s club instead of XYZ Charities, as he stated the reason he provided was to retain the customer who was pressuring the salesperson.


Fairness is basically concerned with disclosing the conflict of interest being responsible and fair. The salesperson in Region G was told to submit his expenses to the U.S. office or the office in Canada, wherever the majority of expenses have occurred, but instead he sent it to both offices and claimed reimbursement from both offices.The salesman’s actions were not right and honorable, and they violated the ethical principle of Fairness.

Another example of fairness through the case is of a staff member who bought the tickets for a NFL team, instead of buying the U2 concerts tickets which were asked by the customers.He occasionally takes the customer with him, while most of the time he takes his brother or wife with him, this shows the conflict of interest which overcomes the staff member. Also, taking the staff member was an unethical decision.

Question 2

Code of Ethics/ Code of Conduct for the case firm:

Ethics are important for any strong organization, small or big. Ethics is the key to boost the brand image, Morales of the employees and to encourage loyalty in employees and the customers of the organization.

Every organization has its own Code of Ethics to support and improve the practices of the business through enhanced and ethical decision making and working accordingly to the codes.

The Code of Ethics of Sparky’s company should look like:

The Code of Ethics should start from describing who is under its binding, related to the case; the Code of Ethics should not only be binding for higher level employees but also for the staff who is working in the organization.Ethics and Internal Controls A Case of Entertainment Expenses Case Solution

After setting the criteria the Code of Ethics should outline the fundamental principles. These principals should be as stringent as stated in the International Ethics standard for the organizations like Sparky’s. Also, whenever the codes are revised, they should be updated in the Code of Ethics of the organization.The new codes should also be added if the situation has changed or certain events have occurred which need amendments in the Codes to make it better for the organization.

The fundamental principles and standards should be included in the code of ethics based on the events arose in the organization. In an organization like Sparky’s the main principles and standards that are required to be included can be...............

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