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Ethical Dilemma: Controls built into limited-payment expense

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Ethical Dilemma

Many companies control their sales reps' travel and other business expenses by using some form of limited-payment plan. That is, management will set a maximum amount that the company will reimburse for specific items such as lodging, meals, entertainment, and laundry. Typically, reps do not have to furnish receipts for certain kinds of items-local transportation, for example-or for items under the maximum limit.

Sometimes under these limited-payment expense control plans, the salespeople's expense accounts do not record what really happened. A rep may overspend the dinner limit by $10 and then make it up on the report by adding to an inexpensive breakfast or lunch. One rep padded his taxi expenses (where no receipts were required) to make up what he overspent on food. He claimed that there was no way he could eat properly in that city on the limited amount set by the company. In other cases, reps may under spend the limit on meals or entertainment, but their expense accounts state that they spent the maximum allowed. The reps claim that they should be allowed to economize in order to earn extra money, so long as their job performance and customer service do not suffer.

Question: As a means of getting around the controls built into limited-payment expense plans, are any or all of the above-described practices ethical?

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Question: As a means of getting around the controls built into limited-payment expense plans, are any or all of the above-described practices ethical?

In this scenario, the Sales Managers are being asked to follow an established policy for their travel and expenses. In each situation the salesman are being ...

Solution Summary

Solution offers a brief summary of an ethical situation that demonstrates an issue in limited-payment expense systems.

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