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Fraud at Coral Gables Hospital

Can someone please provide some assistance with this question about ethics lapse? Please read the attached carefully for complete details and the question.

This was the forum question: Find a newspaper or journal article that describes an ethics lapse in a nonprofit organization. Please help write a word analysis of the issue and how it could have been avoided. I need help responding to the post below.

In 1994 the nonprofit hospital of Coral Gables was exposed for embezzlement and fraud on the heels of the Board of Directors discovering that it was nearly bankrupt. It appeared at the time to be completely unexpected, volunteers were in excess, citizens were on the board, and health fairs were being sponsored at the hospital (Langley, 1996). It was in June the Board of Directors discovered that the hospital was losing approximately $1 million per month and cannot understand why until an attorney discovered the embezzlement.

Main aspect of the failing was financial fraud. Similar to their for-profit counterparts nonprofit employees conduct fraud equal to the alteration of financial records, lying, misreporting data and multiple other ways such was the case at Coral Gables Hospital (Ethics Resource Center, 2007). Anything the lack of oversight of the executive management by the Board of Directors was blatant. The administrators of the hospital were using funding for exuberant purchases of homes and trips in addition to falsifying employee records creating employees that really did not exist. Additionally hospital funds were reinvested into outside projects including a strip mall. It is worth mentioning that one hospital administrator was found to have smelted silver from radiology in order to purchase illicit drugs (Langley, 1996).

One such reason for the lack of oversight is perceived perception of lowered ethical behaviors of those in leadership mainly the Board of Directors (Ethics Resource Center, 2007). In the case of Coral Gables Hospital the Board of Directors and expensive taste although not nearly as expensive as that of the administrators however it could be perceived that the behavior was acceptable by the administrators. The explication of nonprofit organization my multiple levels of organization is more common when the top leadership itself falters.

In this particular instance one way that the situation could have been avoided would have been to implement a strong ethical Board of Directors for the hospital. There are four major components as discussed by the Ethics Resource Center which include ethical leadership, reinforcement by the management team, an internal commitment and consistency with ethical messaging (Ethics Resource Center, 2007). Without these components in place it is easy for many in the nonprofit organization they do not have personal ethical standards to increase the risk of reduced ethics and potential of financial fraud within the organization.

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Step 1
I agree with what the piece says. if there is embezzlement and fraud in a nonprofit organization, soon it will be bankrupt. Fraud and embezzlement is a result of bad administration. Unethical administration has no moral fiber and so is nonprofit goes into bankruptcy. What happened at Coral Gables was that the administration was misled by the lavish life styles of the board of directors. The administration considers lavish spending as its entitlement. It stoops to altering financial records, misreporting data, and ...

Solution Summary

This solution explains the reasons for fraud at Coral Gables Hospital. The sources used are also included in the solution.