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GOVERNANCE AND ETHICS

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Table of Contents-

Mention the stakeholders-

After analyzing this specific case study, it has come to know that the key stakeholders are assistant accountant, accountant of the business, local town banks and trade debaters (Weaver and Clark, 2015). All of those stakeholders are closely associated with each other and they are the stakeholders of Brady Industrial Products. All of those stakeholders are very important from the perspective of Brady Industrial Products in order to make profits at a prefabricated level.   

The main ethical issues involved-

The key ethical issue that has been involved in this specific study is entirely based into taking loans from banks in a very inappropriate and inaccurate way (Foot et al., 2018). The owner of Brady Industrial takes a loan from local town bank without maintaining their current liability in a prefabricated manner. In addition to that, the ratio of current liability and current asset had to be maintained at 1.2:1, which has not been maintained by the owner of Brady Industrial. It is the biggest ethical issue from the perspective of this specific case study (Arvidsson, 2018). Additionally, the loan has been taken while considering the core purpose of loan agreement, which is another eth9ical issue of this problem.

Steps to resolve the dilemma

In the present case study it has been mentioned that Sharon Roch, the assistant Bank manager of Brdy Industrial products has noticed that the owner of the bank has failed to maintain the minimum current liabilities to 1.2:1 ratio. However, the individual has promised to maintain the standard liabilities ratio at the time of taking bank Loan. Thus, in this case the contract between the bank owner and institution has been breached. The steps that Sharon need to take to resolve the ethical dilemma have been discussed below:

Contract law is being created between two individuals so that an objective can be met. For instance, in this case contract has been created between Tim and Sharon for maintaining minimum liabilities of $1100, 000. On the contrary, it has been noted that Tim has maintained 1,000,000 liabilities. Thus, they have breached the provisions of contract law. As per the provision of contract law financial loans need to be repaid within 60 days (consultaustralia.com.au, 2019). However, in this case Tim has decided to pay the loan after 18 Months due to lack of finance. Thus, it can be mentioned that the individual has breached the provision of the law. As per subsection (2), the contract can be breached if it does not fulfil the requirement of both the parties. Thus, in this case the bank can breach the contract because the individual has failed to maintained minimum loan balance (consultaustralia.com.au, 2019).

Recommendations

If I would have been in Sharon place I would have also breach the contract because the owner of the bank has failed to maintain the current liabilities. In addition to that I could have also gone to the apex court if the contract between the two parties has been breached. In addition to that before taking loan form the banking institution I would stable my liquidity ratio so that I can return the cash to the bank within the loan period. However, if much kind of financial lack back occurs than I can sell some of my inventories and request my trade debtors to pay the debts on time so that I can mobilise that money while paying back the loan to the bank organisation.

Reference List

  • Arvidsson, S. ed., 2018. Challenges in Managing Sustainable Business: Reporting, Taxation, Ethics and Governance. Springer.
  • consultaustralia.com.au 2019 Contract law viewed on 28 December 2018 <https://www.consultaustralia.com.au/docs/default-source/contracts-liability/Consult_Australia_Response_to_AGD_Discussion_Paper_on_Contract_Law_-_July_2012.pdf?sfvrsn=0>
  • Foot, H., Scott, I.A., Russell, G.M., Cottrell, N., Sturman, N. and Freeman, C.R., 2018. Ethics and site-specific governance approvals for multi-centre, inter-sector health care research. Med J Aust209(4), pp.175-6.
  • Weaver, G.R. and Clark, C.E., 2015. Behavioral Ethics, Behavioral Governance, and Corruption in and by Organizations. In Debates of Corruption and Integrity (pp. 135-158). Palgrave Macmillan, London.

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