ETHICAL AND LEGAL DILEMMA: Imagine that you are the Chief Financial Officer of a medium to large company.

ETHICAL AND LEGAL DILEMMA:Imagine that you are the Chief Financial Officer of a medium to large company. It is April and the Chief Executive Officer has just returned from a meeting with the company's bankers. She calls you to her office to discuss the results of the negotiations. As things stand, the company requires a fairly significant injection of capital which will be used to modernize plant and equipment. The company has been promised new orders if it can produce goods to an international standard. Existing machinery is incapable of manufacturing the required level of quality. Whilst the bank is sympathetic, current lending policies require borrowers to demonstrate an adequate current and projected cash flow, as well as a level of profitability sufficient to indicate a capacity to make repayments from an early date. The problem is that, largely because of some industrial problems, the business has not been performing at a level which realizes even its 'unimproved' potential. Strictly speaking, the figures would not satisfy the bank's criteria.The CEO reminds you of all of this and then mentions that she has told the bank that the company is in excellent shape, that she believes that its financial results will meet the criteria and that she will ask the Chief Financial Officer to deliver a financial report to the bank at the beginning of the next week. She tells you that it is up to you to decide upon the contents of that report.Two final pieces of information; you have recently purchased a home - leveraged with a significant mortgage. Failure to invest and gain the promised new orders is almost certain to lead to major retrenchments of personnel.WHAT ARE THE ISSUES?What are some of the ethical issues arising in a case such as this? For the most part they are fairly obvious: