Ethical Issues Faced By Troy Normand in the WorldCom Case and Best Action

The financial report is a vita financial management aspect and planning process in an organization. That is why it is necessary to make sure that all the data listed in financial reports are correct. So to say, ethical reporting is an imoportant part in the processes of planning, utilization, and financial reports execution within an organization. This memo provides a critical analysis of ethical report together with a glipse on a case study by Troy Normand of the WorldCom and how the responded to queries thrown at him during trial. Actually, Troy was a manger in the organization’s corporate reporting department. Troy pleaded guilty to the charges imposed against the five of them charged with erroneous reporting of financial parameters of WorldCom’s financial position.

Background and Discussion

The objective of this case is to identify the ethical issue faced by Troy Normand and identify the alternative course of action that Troy could have taken given the scenario he was facing. Actually, financial analysts, auditors, and financial reporters are often expected to maintain the highest standards of accuracy, honesty, and integrity. This is because the core purpose of financial reporting is to give useful information that could be used to make key management decisions in business organizations. In this regard, Troy and his colleagues did not uphold the ethical standards expected in accounting profession. Actually, they made wrong entries which were going to affect the financial image and general image of the organization in terms of financial health and performance. At the same time, creditors, financial institutions, investors and suppliers usually rely on the financial statements and reports of an organization when making key decisions regarding their engagement with business organizations. This is because financial reports gives an overview of an organization’s present performance as well as information about the ability of an organization to maintain, sustain, and improve its present performance in the long run. As such, providing wrong financial reports may negatively affect creditors, investors, suppliers and other stakeholders which are in business engagements with the organization. This can also affect the image of the organization especially if the erroneous financial reporting is discovered and the public gets to know about the same. From the look of things, Troy and his colleagues were conscious of the dubious reporting but they were afraid of defying orders from their seniors.

However, Troy could have taken a bold step to reject the idea of making erroneous financial entries. Such bold decision would have enabled Troy to defend the integrity of the accounting profession while also safeguarding their employer from the misfortunes resulting from misguided and erroneous financial reporting.

Recommendations

In fact, Troy and his colleagues who were charged with dishonest financial reporting should have reported those who orchestrated the mischievous schemes to relevant authorities. Taking the action to report to the authorities would have protected their jobs, their image, and the employer’s financial wellbeing.

Second, the employees, especially those in the finance department ought to receive consistent training on ethical standards in financial reporting, and negative implications of breaching such standards.

Third, companies should review their performance as far as integrity and ethical standards in financial reporting are concerned.

Conclusion

Integrity and honesty are key elements of appropriate financial reporting. This study demonstrates the implications that poor or dishonest financial reports may have on an individual as well as businesses. Apart from destroying careers, lack of integrity in financial reporting may also negatively affect the relationship between an organization and various stakeholders such as suppliers, creditors, and investors. Consequently, poor financial reporting would have adverse effect in the financial performance of business firms. Therefore, it is prudent to uphold high standards of ethical behaviors and professional conduct when compiling and presenting financial reports.