Reply to 3 student posts with no less that 150 words each.

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ASSIGNMENT: Replies to classmates should be a minimum of 150 words and include direct questions.

STUDENT1 Alvis:

1. Suppose you are the chief financial officer (CFO) responsible for the financial statements of Philip Morris. What ethical issue would you face as you consider what to report in your company’s annual report about the cash payments? What is the ethical course of action for you to take in this situation?

If I don’t report accurate/truthful numbers, it will be exposed in an audit and that would lead to unethical business practice. As a CFO, I have an obligation to report honest and accurate data. Consumers along with investors have the right to know the truths about the goods and services my company provides. Not upholding this obligation makes consumers and investors lose trust in me and my company. The ethical course of action to take in this scenario is to tell the truth about the product, the good, bad and ugly and report honest, accurate numbers. In this particular scenario, people will continue to smoke regardless of the risks involved. As long as I warn people of those risks while using my product I feel that I have fulfilled my obligation.

2. What are some of the negative consequences to Philip Morris for not telling the truth? What are some of the negative consequences to Philip Morris for telling the truth?

In my opinion, the consequences could potentially be the same whether Philip Morris tells the truth or a lie. It would be in their best interest to tell the truth because that shows ethical business practice. If they tell their investors about the potential risks of smoking they risk losing them which equates to a potential loss of money. If they lie about the risks of smoking or just fail to report their true findings, they risk losing their investors if the truths are exposed or uncovered. They could be cited for unethical business practices which could equate to loss of money from investors and law suits. While the consequences may be the same, I’m sure their investors would rather know the truth. It could also show their investors how honest and ethical the company is. I’m sure that has some weight when it comes to their investors making informed decisions.

STUDNET 2 Richard:

1. Suppose you are the chief financial officer (CFO) responsible for the financial statements of Philip Morris. What ethical issue would you face as you consider what to report in your company’s annual report about the cash payments? What is the ethical course of action for you to take in this situation?

I think for most CFO’s the ethical issuing is, how to disclose or report a potential negative action without that information having a negative effect on the corporation, or the financial information being misrepresented. In the case of Philip Morris verses Williams, misrepresentation of material facts and an intent to induce another to rely on the misrepresentation against Philip Morris were proven in that cases (Stokes & Rubin, 2010). Knowing the facts of that case, it would be essential for the CFO of Philip Morris to report data in the corporation’s annual report ethically and accurately.

2. What are some of the negative consequences to Philip Morris for not telling the truth? What are some of the negative consequences to Philip Morris for telling the truth?

Negative consequences to Philip Morris for not telling the truth could range from being found guilty of fraudulent financial reporting or overstating their revenue and assets on the financial statement in the attempt to minimize the impact of the cash payments, significant changes in ownership, and delisting by national stock exchanges, in addition to financial penalties imposed (Hope, 2006). Some of the negative consequences to Philip Morris for telling the truth, are profit losses, Securities and Exchange Commission (SEC) actions that resulted in financial penalties, and class action law suits.

Reference:

Hope, Jeremy. (2006). Reinventing the cfo: how financial managers can transform their roles and add greater value. [Books24x7 version] Available from http://common.books24x7.com/toc.aspx?bookid=18246.

Stokes, A. Q., & Rubin, D. (2010). Activism and the limits of symmetry: The public relations battle between colorado GASP and philip morris. Journal of Public Relations Research, 22(1), 26-48. doi:10.1080/10627260903150268

STUDENT3 Karen:

  1. Suppose you are the chief financial officer (CFO) responsible for the financial statements of Philip Morris. What ethical issue would you face as you consider what to report in your company’s annual report about the cash payments? What is the ethical course of action for you to take in this situation?

“Investors and creditors need relevant and faithfully representative information about a company they are investing in or lending money to” (Nobles, Mattison, & Matsumura, 2014). Ethically you have a responsibility to report this information; it would have to be placed in the company’s annual report. Cash payments of this magnitude are something that should not be hidden from investors. Since an independent accountant will review and audit the financial statement the decision would likely be made to include this information to present a fair scope of the company’s finances.

  1. What are some of the negative consequences to Philip Morris for not telling the truth? What are some of the negative consequences to Philip Morris for telling the truth?

Philip Morris maintained that they were unaware of the negative effects of smoking. When it was found that, they were aware they concealed their findings. Since they failed to tell the truth, stronger regulations were placed on the tobacco industry. In addition to the settlement payments, Philip Morris also had to do packaging stating that tobacco causes cancer and a government directed “sin” tax was placed on tobacco. Had Philip Morris told the truth they would have lost investors and consumers. Ultimately, either way consumers would have ceased using their product.

Nobles, T., Mattison, B., & Matsumura, E. M. (2014). Horngren’s accounting (10th ed.). Upper Saddle River, NJ: Pearson.

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