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PWC case study

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kyle oh

on 26 April 2010

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Transcript of PWC case study

PricewaterhouseCoopers
"The Travel Expense Billing Controversy"
Case 14 Kyle Oh
Mark Mays
Amar Parikh
T.J. Colclough Company Background Found in 1849 by Samuel L. Price in London
1998- Worldwide merger of Price Waterhouse and Coopers & Lybrand to create PricewaterhouseCoopers
PwC approach: Corporate Responsibility from four perspectives - Community, Environment, People, and Marketplace.

PwC is a leader in both the conceptual and practical aspects of corporate responsibility. Every year across our network of firms, thousands of PwC people volunteer their time to support community programs, contribute their professional expertise to not-for-profit organizations, and help mobilize various business coalitions that address local needs.
PricewaterhouseCoopers people as of June 2009:

Partners 8,552
Client service staff 123,548
Practice support staff 31,445
Total 163,545
Cheating customers out of discounts
False Information
Cover-up

Ethical Issues (Question 1)
Federal government
customer
company
employees
partners in the business

the airlines are affiliated with the business and
not being true to the company
Who are the stakeholders and
what are their stakes? (Question 2) What are thier stakes? The customers are not getting the rebates that they should be rewarded and other businesses are getting tarnished as well.
There is potential for cut backs. The federal
government was not only lied to about speculations and
regulations, but they were also lied to as the customer
themselves.

Their appraisal is wrong because it is not right and fair.
The ethical arguments does meet the basic of level of the CRS pyramid, which is basically, means to be profitable.
It goes against legal, ethical and philanthropical responsibilities.

First we would hire PR to help to fix tarnished reputation of the company. Because company’s name is now connected to the scandal. Requiring that our employees and managers ask themselves the ethical test questions before partaking in business activities.

Who? Neal A. Roberts vs. PwC
Controversy Roberts learned that his employer was earning millions of dollars a year by way of a billing practice that he thought was questionable.
The firm had been collecting large rebated on airline tickets and other travel expenses being charged as expenses to clients of the firm.
It turns out that these rebates were not being returned to the firm's clients in the form of savings, but rather, the firm was keeping these rebates for itself. The way this was working was that the firm would bill the clients for the full price of airline tickets and other travel-related expenses, but privately, the firm negotiated discounts and rebates that they then got at the end of the year based upon total amounts spent. The clients were unaware of the back-end discounts and rebates the firm was getting; therefore, they were being charged more than the firm's true out-of-pocket expenses for the items. Roberts raised objections to Barbara Kipp, who was in charge of ethics department Kipp sent email to Albert Thiess, the New York based partner responsible for oversight of the firm's travel department -
- She thought the rebate policy looked like the firm was "double dipping" Roberts sent email to Hilary Krane, an in-house PwC lawyer Policy is revised: PwC would seek front-end discounts of 28% with 8% rebates remaining to "cover our costs." Keeping 8% savings. Roberts not satisfied so he filed False Claims Act. Timeline Anderson's Story CFO of North Valley Hospital for 17 years was
told to cook books so the hospital could recieve more in reimbursements from the government.
Filed FCA against HCA
PAID: $1.5 billion
Forced to leave town to find work.
Spent the next 10yrs trying to find a job while collecting evidence for the case.
missed his sons football games
not being at his mother's side when
she died.
life style equilivent to witeness
protection without the protection.

Connie Anderson (wife) said, "Knowing what I know now and knowing how long it's been, I'm not sure I would have agreed to pursuing the case. I don't think any amount of money is going to take care of what we've been through." What is your appraisal of the ethics of the travel expense billing practices described in the case? What are the ethical arguments for and against them? (Question 3) What is your assessment of the qui tam provisions of the False Claims Act? (Question 7) If you managed the company how would you handle the issue (s) you find to manifest in the case? Why? What are the strength and weaknesses of such a law? (Question 7)
Strengths

Regulate Businesses
Recovers lost economic funds for the government Weaknesses

Whistle blower
black listed
Protection
Hardships
Company
any employee could be a whistle blower
Justice Golden Rule-Focuses on the premise that you should do unto others as you would have them do unto you
Categorical Imperative-A duty-based principle of ethics. A sense of duty arises from reason or rational nature.
(Act only on rules that you would be
willing to see everyone follow.)
Rights Consumer rights

Employee rights

Shareholders rights
The false claims act is good in it sense that it allows an employee to speak up when a company is partaking in illegal activities.
Does this provide a financial incentive for employees to want to gather “dirt” on their employers and use it for their own financial gain? (Question 7) NO! " IN CASE OF
WHISTLE-BLOWER
BREAK GLASS "
Full transcript