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Summary of Unethical Behavior
Transcript of Summary of Unethical Behavior
to report higher net income and beat analysts' expectations for fiscal quarters in 2010 and 2011
based on desire to exceed people's expectations
to receive recognition and respect
1. Have Several Managers who work in Financial Office
- Having several people working in this type of sessions will help preventing from making unethical decisions (ex. If one makes bad decision, other one could stop them)
2. Create Checks and Balances
- Rather than putting related responsibilities (finance wise) in the hands of one employee, create a system of checks and balances to minimize the opportunities for unethical behavior.
Summary of unethical Act?
How to Prevent Unethical Behavior
How they were Caught?
American packaged food company based in Stockton, California specializing in marketing nuts, particularly walnuts and almonds
Industry: Consumer Packaged Goods
founded in 1912 as Diamond Walnut Growers, Inc., a member-owned Californian agricultural cooperative association
has about 1400 full-time employees in Wisconsin, Indiana, Tennessee, Alabama and the United Kingdom
purchases raw material from domestic and international sources
- During 2010 and 2011, the company lied and inflated the price of walnuts
=> This was reflected in their financial statement (cost of sales section) and seemed like they made more profit
, former Chief Financial Officer, alleged to record into later fiscal periods.
, former Chief Executive Officer, already knew pricing of walnut is wrong, but he just certified the financial statement.
- World's largest accounting and consulting firm caught the company through the incorrectly filled out payments.
- When they were asked the period of payment, the company was “somewhat of a blur.”
had to pay $5 million to settle civil charges that the company and two former top executives mislead investors
had to restate its financial results in 2012
company's stock price fell to $17 per share from a high of $90 a share in 2011
former Chief Executive Officer Michael Mendes had to pay a $125,000 penalty to settle the case.
was confiscated of more than $4 million in bonuses and other benefits
Chief Financial Officer and Chief Executive Officer resigned, replaced by other people