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IAI Actuarial Core Principles · Business Finance · Ethical responsibilities of owners and managers

Which of the following is an example of a manager acting ethically in discharging his duty to the owners of the company?

Reporting a colleague's falsified expense claims through the whistleblowing procedure is the ethical action, because it protects the owners' assets and the company's integrity. The other choices place personal gain or misleading figures ahead of the duty managers owe to shareholders.

  1. AAwarding a contract to a supplier who offered him a personal gift
  2. BUsing company funds for a private holiday and treating it as a business trip
  3. CRejecting a profitable project only because it would reduce his own bonus
  4. DReporting a colleague's falsified expense claims through the company's whistleblowing procedureCorrect
  5. Inflating sales figures to meet the budget target

Explanation

Reporting wrongdoing through proper channels protects owners' assets and the integrity of the company. A gift-influenced award, private use of funds and inflated sales are breaches of duty. Rejecting a good project to protect a personal bonus puts self-interest ahead of owners.

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