Business 303 Second Individual Case Spring 2011

BUSINESS 303 SECOND INDIVIDUAL CASE SPRING 2011

Instructions:

Read the case below. Then answer the following questions in clear and complete sentences. Avoid vague rhetoric and generalizations. Stick to the facts of the case as much as possible. Please try not to fabricate new or unrelated details. Provide one or two paragraph-length answers to each question. Answer the questions with the requested perspectives in mind: avoid vague and general answers about “being ethical” or “doing the right thing”. Please remember that quantity is not important, but quality is. Quality is defined based on the appropriate use of terminology to show you know the concepts of this course. Grammar and spelling will be marked.

Length: Maximum of five pages, double-spaced (plus a cover page = 6 pages).

Deadline: Wednesday, March 30, 2011, 9:30 AM.

Submission Instructions: Please submit in writing and to WebCT before the deadline.

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The Lower Salisford Sewer Authority by Jerry Sheppard

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BUSINESS 303 SECOND INDIVIDUAL CASE SPRING 2011

This is not a story about famous and/or brave whistle blowers. No one appeared on the cover of Timemagazine or had a major motion picture made about them. No one appeared before any governmental or regulatory commission. It is, literally, a story of crappy, ignoble motives. It happened to me.

Penn State, when I was there, had four 10-week terms per year, plus a two-week finals period per term: Fall (September to December), Winter (January to March), Spring (April to June) and an optional Summer term (July to August). Last year students who had completed their accounting courses could go on an internship for the Winter term. This meant you could earn some money, learn the accounting profession, line up a job for post graduation in June.

I had managed to obtain an internship at a large regional accounting firm as an auditor. If I could make the grade there I would be able to have a job lined up and could put on my beer goggles and coast through spring term. I had saved most of my elective courses and would be taking Marriage & the Family 201, Higher Ed 101 (the University student and the University), Science, Technology & Society 107 (the philosophy of Technology – a great course) and Management 303 (what would later become Strategy, I could not avoid one last business class).

The second client I worked on was the Lower Salis-ford Sewer Authority, a municipally owned sewage treatment plant. Fortunately, we didn’t work at the actual physical plant but rather at the Salisford Bank and Trust that served as the trustee for the Authority’s records.

I had been doing cash disbursements tests. A task typically reserved for entry-level folks. At 21 and not yet out of university, I was certainly entry level. The cash disbursements test involves verifying to see if randomly selected checks (cash disbursements) had supporting documentation: usually a receipt with the date, number of the check and some approval signatures. In the course of doing this test, I came upon something pretty much like the following document:

This did not look like any other receipt I had ever seen. Being new at this, and since we were the only two auditors on the job, I asked my senior supervisor about the document… He said, “You know we’re working at a sewer authority?” I dumbly responded, “Yes?” I had a feeling where this was leading. “Well, the treatment plant separates out the solids from the liquids. The liquids are cleaned and dumped back into the river. What’s left over Mr. Haulman,” he said, pointing to the name on the scrap of paper, “takes away.”

Now, I’m barely an accountant, I’m not out of school, and I really don't know a great deal about this kind of material. However, it occurred to me that one might want to be careful where this material was dumped. I did not know what was in this stuff. I thought the natural ingredients were okay, but there’s all kinds of stuff in the sewer system. Has this been tested for heavy metals, drugs, infectious agents, etc.? This was pre-web browsers so there were not a lot of places I could go to research “How dangerous is post-treatment fecal matter?” So I asked the obvious question, “Well then what does he do with it?”

Our story takes a strange turn here. I got the oddest answer. This man, we’ll call him Joe, a Certified Public Accountant (the U.S. equivalent to a Chartered Accountant) and an MBA looks me in the eye and says, “the document,” he looks down and points to the scrap of paper (not much bigger than the one you have seen) “can be traced accurately to the check, is properly calculated, approved and dated.” He went back to work on what he had been doing previously.

They didn’t teach us about this in my business ethics class – because I didn’t have one as an undergrad. It was pretty clear that further inquiries would not be welcome. I could investigate further, I could ask the next guy up the hierarchy about this. Yet, remember those ignoble motives? Given Joe’s answer to that last question, the closer I’m likely to get to an answer about this material, the further away my job prospect will get. What do I do? Give up a career over some byproduct that may be perfectly safe in any case.

What I did, was go back to my cash disbursements test. That nagging feeling remained. I completed my internship and got hired. I had a great spring term and started back at the firm that summer!

The thing about accounting is it has an annual cycle. I was scheduled to go back to the Lower Salisford Sewer Authority. I was still bothered by Mr. Haulman. Joe had left the firm and now the next guy up the hierarchy was in charge of the audit. It was time I asked him about Mr. Haulman. I got the same answer. Two weeks later I was informed that I was needed more on another job that I was on the year before. I never went back to the Salisford Bank and Trust or that audit client.

I left the accounting firm about a year later. Mr. Haulman still bothered me but what could I do? Was there really anything to worry about? I think I need some advice. Perhaps you can advise me. Should I blow the whistle? Should I at least make an anonymous phone call to the Environmental Protection Agency?

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BUSINESS 303 SECOND INDIVIDUAL CASE SPRING 2011

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Questions:

Who are all the stakeholders who might be impacted here and how might they be impacted (10%)?
What changed? Why would I be more likely to blow the whistle at the end of the case than at the beginning (15%)?
At the end, identify what alternatives are open to me (15%)?
What happened? I’m ethical. Why didn’t I address this? What would the theories we’ve discussed say (15%)?
What are the pros and cons of blowing the whistle as an intern, as a first year accountant, and as a past employee. (15%)?
What would you recommend in the end (15%)?

* Writing mechanics (15%)

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