ACCA Strategic Professional · Strategic Business Leader · Leadership and organisational culture
Kessler Logistics' chair is a charismatic leader who inspires staff with a compelling vision and challenges them to exceed targets. However, she also pressures finance staff to book revenue early to meet market expectations, and those who object are told to be team players. Which statement best reflects the ethical implication of this situation?
The leader remains responsible for the ethical tone. A transformational style does not make behaviour ethical, and pressuring staff to book revenue early while dismissing objections fosters a culture risking misreporting and harming the public interest. Responsibility is not limited to the finance staff.
- ATransformational style does not remove the leader's responsibility to set an ethical tone, and the pressure creates a culture that risks misreporting and undermines the public interestCorrect
- BThe behaviour is acceptable because inspiring leadership by its nature creates ethical outcomes
- CThe behaviour is acceptable provided that the early revenue is disclosed in the notes after the year end
- DOnly the finance staff carry ethical responsibility because they prepare the figures
Explanation
Leaders set the tone at the top, and a charismatic style can amplify the influence of unethical pressure. Pushing early revenue recognition and discouraging objections encourages misreporting and weakens ethical safeguards. Charisma does not guarantee ethical outcomes, later disclosure does not make improper recognition proper, and responsibility also rests with the leader and board.
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