The Consultant's Desk

The Consultant's Desk
Poring over the details on your behalf

Saturday, May 19, 2007

Bending the Rules

That Mullins case, where the fellow lost three jobs for essentially the same sins -- cheating on expense resports and forging chits in order to get reimbursed. It was found that he cost the state and taxpayers more than $6,000 in false expenses.

Now it could be argued that $6,000 is a paltry sum, especially when governments are spending millions and billions in dollars. Why would they bother with something as small as $6,000? Because it adds up, is one reason. Because this fellow was chronic at it is another reason. Because he admitted to having lost two previous jobs for the same types of acts. Because eventually the public absorbs these frauds in the form of higher prices of goods and services while wages stagnate.

Additionally, Mullins brings up so much in the area of ethical practices. It brings to mind several case studies that will be touched upon in this writing. Eventually, they'll be drawn out a bit more. But today I want to consider some of the tangents to Mullins and consider whether the rules should be bent in some situations. We need to think about whether rules are written in stone or whether their interpretation is governed by the extenuating circumstances.

Padding the Account

First, Mullins admitted to padding his expense account and cheating on expenses. He made long trips outside of his district that appeared to be not related to his work at all, yet he charged the mileage and associated costs to his expense account.

How many have used the trip to the conference as an excuse to have a family visit and charged all of the costs back to the company, without making an effort to parse out which was actually business and which was social? I remember having a very long conversation with a friend some 25 years ago who bundled all of the costs and thought nothing of charging the company for the entire package. Her thinking was it would be dumb not to do so. Why should she incur the cost when she was already there and probably would not have gone except for the company business. So she just stayed a little longer and had the company pay for the extra time.

But this also brings up a comment in an article I read recently. It encouraged managers to go out of their way to increase morale by buying some special treat for the entire department and then charging the cost to miscellaneous expenses or the stationery budget. Pizza for the department isn't two packages of paper. Dinner at the Thai restaurant isn't toner for the copier. Maybe there should be an office morale or a discretionary spending allowance.

In thinking about that advice, I remembered the Executive Manager of a nonprofit who started off very well. But as time passed, the monthly financials received by the Board started showing strange charges to expenses that were out of proportion. Unfortunately, the Board ratified (not unanimously) having one of the Directors also serve as the Treasurer as well as the organization's accountant. He, for some reason, did not see the strange charges. As it turned out, the EM was pulling money from the organization. After a huge scandal and a very long and thorough investigation by the City Council, the EM was asked to resign.

But the Treasurer and the other Directors should have seen those monthly expenses and asked more questions. And after the second month of questionable expenses, it seems the Treasurer/Accountant/Director should have resigned from two positions.

Hotel Stays

Mullins stayed overnight in cities and forged hotel receipts but he actually slept in his car and incurred no hotel expenses whatsoever.

Would this still be considered unethical if instead of Mullins it was a friend of his who had lost his apartment and needed a place to stay for a short time until he could get his bearings? Would Mullins have needed to get authorization to help out his friend? It was a benevolence. Should we leave a friend to the wolves because we can't fudge on the expense account?

Another Example

There was a case of a woman who was suffering domestic abuse. She siphoned funds out of the company expense account in order to help herself manage. When she was discovered, the matter was shushed up. She was hired as a manager at another high profile company but not put in charge of finances. When there's domestic abuse or some extraordinary circumstance, should an exception be made?

About the Rules

Rules and standards are made for a reason. Should they be bent under certain circumstances? How compelling should the situation be if the answer is "Yes" or is the answer always a resolute "No?"

Business Background Checks

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