RACY CASES-6 Who is the moral man?


V Pattabhi Ram

Wafers didn’t know how to react.  The last few days were devastating.  She was on an audit and scented a racket. Executives at Titanic (the company where she audited) traveled extensively during the year. The taxi fare from their residence to the station and from the station to the hotel was Rs 250/- apiece.  They all claimed this as a matter of course.  No documentary evidences were attached.  What if they traveled by bus and pocketed the differential, she had asked herself.  Her audit professor had told the class, “Auditors are watchdogs and not bloodhounds”.  But that did not deter her.

When she looked into the tour reports and tour plans she noticed that the executives generally traveled in groups of five.  Their work demanded so.  She reasoned that from the station to the hotel and from the hotel to the station they wouldn’t be hiring five cabs, but only one.  If true, it meant that they would really be spending only Rs 500 but between them would be claiming Rs 2500/- pocketing the Rs 2000/-.  Wafers’ audit firm had drilled into her the virtue of sampling and extrapolating.  She conducted 50 verifications and found that in 40 of them this was the practice.  80% of the sample committed this fudge. They had all charged the company Rs 500 each.  She extrapolated the numbers.  1000 employees traveled during the year in groups of 5; this meant that 200 groups traveled.  Such travels were 5 times a month.  The excessive payment she reckoned was 200 groups X 5 times X 12 months X Rs 2000 = 240,00,000.  Since 80% of the sample committed the fudge, the excess payment could be of the order of Rs 192 lakhs or close to Rs 2 crore she reasoned.

She had spoken to one of the Finance officers at Titanic and he was pretty evasive saying under the rules of the company proof of expending was not required.  Her suspicion further strengthened, she spoke to one of the executives who regularly traveled and he took it cool saying this was par on course since he was drawing only what he was entitled to.  She countered, “By that measure is it okay if one of your bosses travels by overnight train and claims air fare merely because he is eligible for it”. He simply smiled suggesting that Wafers was clearly wet behind the ears.  Wafers ran through more documents and was shocked to find that senior executives at Titanic had checked into their hotels at 0600 hours, attended meetings at 0900 hours but claimed airfare for flights that would have actually arrived only at 1400 hours!  Boarding passes and flight tickets weren’t required to be enclosed.  A declaration would suffice.  As Wafers ran up the audit on this she found that the company was out of pocket by another Rs 2 crore thanks to this practice.  And in quite a few cases the boss’s wife traveled; “business promotion expenses” read the accounting entry. “The funeral expenses” of a senior manager was a business expense; “packing and forwarding” read the accounting entry. Aghast by all this she spoke up with her principal.  He said he would talk with the management but his body language told her a different story.

Rather glum she narrated this story to the gang.  Muscles winked, “So your auditor chose to look the other way?”  He couldn’t forget the gossip at the medical college.  And sounded out to the gang of how the brilliant professor who teaches them nephrology travels round the world thanks to pharmaceutical companies sponsoring expensive all paid trips for him and other top-notch doctors.    A surprised Wafers asked, “do you think there is something hanky panky”.  “No”, said Muscles, “The professor has a lily white reputation.”  Rinku, the young reporter asked,  “buy why should he accept these.  Surely the pharmaceutical company would be expecting a quid pro quo of some kind.” And imagine doctors receiving referral fees when they send patients to the laboratories for tests, added Wafers.  “No one is suggesting that there is an incestuous relationship in this but shouldn’t Caesar’s wife be above suspicion?” asked Muscles aloud.  “You folks have a wrong sense of morality,” remarked China.  “Titanic had the money to spend.  In any case they were willing to spend.  What the hell whether the employees spent it and collected or didn’t spend it and collected?”  And then added, “the pharmaceutical company has to advertise its products.  What the hell if this was the way to advertise to a doctor?”  Its wrong if it acts as an inducement to taking a decision, it isn’t wrong if it’s a gift; a recognition of a good that you have done. “What should be the distance between a doctor and the detail person?  The difference between the judge and the convict, the umpire and the player, the customer and vendor?”  Rinku  asked aloud, sounding a shade uppity about doctors and corporate executives.

That, in a sense, got into China’s goat. “Has the press been a shining paragon of virtue” he fumed.  And slammed, “On the one side the papers attack the government and on the other side they make a song and dance if the government withdraws advertisements with the paper.”  Wafers joined the match.  “They carry huge advertisements of say Reliance and their analyst does a story on Reliance Mutual.”  Muscles added for effect, “The food reviewer tastes the food on the house and then waxes eloquent on how it tastes.”  The normally vociferous Rinku put up a feeble defense, “how do you expect newspapers to sell for Rs 2 when even a cup of tea costs more? Advertisements are the only way out.”

Wafers remembered her professor comment, “You scratch my back, I will scratch yours” as the philosophy that drove businesses.  And had ventured to advise, “young ones when you step into the world tomorrow as fresh chartered accountants, if you want to leave footprints on the sands of time (his favorite turn of phrase she had noted) you have to stand for what is right even when the rest of the world is up against you.  Well, well what about the corporate executives, the doctors, the auditors and the journalists she asked aloud.  She must talk to her professor.

 

 

 

 

 

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About Pattabhi Ram

A chartered accountant by profession, a writer by passion and a teacher by accidental choice.
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One Response to RACY CASES-6 Who is the moral man?

  1. Ranjan says:

    I m happy that the professor walks his talk beautifully by leaving his footprints on sands of time, at the same time making others to do so.

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