Rita Pelzer was just hired as the assistant controller of Yorkshire Inns. The company is a specialty chain hotel with nine hotels concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized. Her primary responsibility is to maintain the hotels high credit rating by paying all bills when due and to take advantage of all cash discounts.
Jamie Catering, the former assistant controller who has been promoted to controller, is training Rita in her new duties. He instructs Rita that she is to continue the practice of preparing all checks “net of discount” and dating the checks the last day of the discount period. “But,” Jamie continues, “we always hold the checks at least four days beyond the discount period before mailing them. That way we get another four days of interest on our money. Most of our creditors need our business and don’t complain. And if they scream about our missing the discount period, we blame it on the mail room or the post office. We’ve only lost one discount out of every hundred we take that way. I think everybody does it. By the way, welcome to our team!”
(a) What are the ethical considerations in this case?
(b) Who are the stakeholders that are harmed or benefited in this situation?
(c) Should Rita continue the practice started by Jamie? Does she have any choice?