Ethical issues in capital budgeting

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Ethical issues in capital budgeting

Although practical necessity plays a vital role in this process, spending decisions come down to priorities and values, as well. A business that is clear about its ethical direction will approach the budgeting process as a way to make choices that help the company realize its vision and its goals in ways that are also financially sustainable, balancing financial considerations with questions of what makes business activities meaningful and worthwhile.

Honest Books Honesty is an ethical principle at the heart of the budgeting process. If the numbers you crunch don't correspond with your actual business activities, then it is unlikely that your budget will reflect genuine ethical priorities.

If your financial processes are clear, accurate and transparent, they will provide you with the tools and information necessary to determine the best way to allocate your resources in ways that are consistent with your company's values. In contrast, fudged numbers are usually the basis for dishonesty and fraud.

Responsibility An ethical business organizes its financial house in ways that reflect a deep understanding of the company's responsibility to a range of stakeholders, from its employees to its community to the environment. Many business budgeting decisions involve choices between thoughtfully dealing with the consequences of company policies and earning extra money by cutting corners.

For example, a business that bases its profitability on paying wages that don't allow workers to adequate support themselves costs the community when these workers are forced to rely on public assistance. Decency Businesses are run by people, and they sustain themselves financially by meeting the needs of the people who are their customers.

Although the stereotype of a traditional business reflects an organization geared toward making money at the expense of basic humanity and decency, ethical companies actually build their bottom lines on principles of kindness and mutual gain.

Ethical budgeting is built on the assumption that treating people well is worth the money that it costs and ultimately pays for itself by earning the loyalty of employees and customers. Conflicts of Interest Ethical business budgeting steers clear of situations that involve conflicts of interest that can lead to dishonest accounting and improper allocation of resources.

A manager who is also a stakeholder with a major vendor may opt to skew the budgeting process to direct a disproportionate share of the company's purchasing revenue toward his own endeavor. Similarly, corporate officers who earn tremendous bonuses based on company profits may prioritize profit over ethical considerations.

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Ethical budgeting involves giving decision-making power primarily to people whose financial priorities are honest and clear. References 2 Ethics Newsline: She has owned and run small food businesses for 30 years.• There are three implications of factoring working capital in to cash flows: At the start of the project, some start-up working capital is required, called the initial working capital investment; it is a cash outflow.

- During the project life, working capital changes can result in cash inflows or outflows.

Ethical issues in capital budgeting

MOST is UNESCO’s intergovernmental science programme on social transformations. MOST works with governments, social and human science communities and civil societies to improve connections between knowledge and action, connections that are one key to positive social change.

Ethical issues in capital budgeting

A guide on how to use the APS Values and Code to make ethical decisions in the APS. Value Imperative: Managing for Superior Shareholder Returns (): James M.

Honest Books

Mctaggart: Books. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead; Ethical Issues. Sanders Swimwear, Inc., produces swimsuits. The following information is to be used for the operating budget this coming year. Average sales price for each swimsuit is estimated to be $ ethical, and environmental performance (Norman and MacDonald, ).

It is in this context that capital budgeting can arguably contribute to mitigating some of these socio-economic issues. The following are discussions positioned within the framework of sustainable development and the development of sustainable enterprises.

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