The Travel Expense Billing Controversy and False Claims Act Essay

PricewaterhouseCoopers LLP (PwC), a major accounting firm, was engaged in unethical billing formulas that generated millions of dollars in redundant revenue to the company. PwC was charging its clients the full price of airline tickets and other travel expenses, such as hotel rooms and car rentals, plot it was actually expending only a small percentage of the full amount billed to its clients due to applied rebates and discounts it received low travel agencies and airline contracts and negotiations. Therefore, the company was overcharging clients and pocketing the difference without revealing the practice (AccountingWeb). However, since Neal A. Roberts, a PwC employee, discovered his employers travel billing practices, PwC found itself in a very difficult situation. Mr. Roberts wasnt in agreement with his companys billing method and made several attempts to address the problem while working for his firm without much success. He reached out to the companys ethics department and t o an in-house PwC lawyer, but only managed to have the companys policy revised, not corrected. A group of people (mostly the companys partners) decided that under the new policy, PwC would have to disclose most of the discounts to its clients but still keep 8 percent of the rebates as a cover our costs fee while retaining the millions collected previously on the earlier rebates (Carroll and Buchholtz 630).Despite these policy changes, Neil A. Roberts remained dissatisfied and decided to file a False Claims lawsuit against PricewaterhouseCoopers LLP. The False Claims Act is a federal legislation that was established to make sure companies were not circumventing the giving medication. Under this legislation, anyone who knows about companies that ar defrauding the government may sue on the governments behalf and share in the proceeds of the suit while being protected from workplace retaliation under the qui tam ( too known as a whistle-blower) nutrition of the Act (Carroll and Buchh oltz 630). In December 2003, Mr. Roberts won the False Claims lawsuit against PwC after much investigation, and the accounting firm agreed to a settlement valued at $54.5 million although it denied the fraud allegations (Weil 1). Considering this travel expense billing controversy, the company failed to obtain integrity and professionalism by carrying out this unethical practice for its own benefit. It was selfish, only seeking profit, and neglected its reputation in frontof clients and the market. In addition, the firm also failed to elaborate important policies and regulations in regards to this unethical practice in order to clog employers from attempting this illegal action. Moreover, the accounting firm was lacking an effective stakeholder management and important principles that could have helped build stakeholder relationships.Since the companys primary and secondary social stakeholders are the employees, managers, clients, ethics committee, management committee, travel comp anies/airlines, and federal government, PwC should develop a strong stakeholder culture and stakeholder management capabilities. They can effectively address stakeholder issues and relationships, analyze the stakeholders power, monitor their interests and needs, circulate with them regularly, and stay engaged with them. In doing so, the company would be able to identify strategies for dealing with the key stakeholders and consider the relative power of different stakeholder groups along with their sizeableness to the issues confronting the organization. PwC desired to be seen as an ethically responsible company by having an ethics committee, but instead, it was only trying to be ethically responsible through and through legitimation, which is a dynamic process by which business seeks to perpetuate its acceptance (Carroll and Buchholtz 95). The firm wanted to continue to obtain financial gain even though Mr. Roberts and other partners had already questioned its practices. For insta nce, modifying its policy to offer discounts of 28 percent while still keeping 8 percent as a service fee.As a result, all these issues influenced Neil A. Roberts decision in filing a False Claims lawsuit against the accounting firm. The False Claims Act is good in its sense, which allows an individual to musical theme a company whenever it is engaging in illegal activities, but Mr. Roberts could be using this Act to gain financial gain as he also participated in the False Claims lawsuit against IBM that settled in 2007. Consequently, these allegations create some concerns in regards to Mr. Roberts intentions. Was he acting ethically to overturn unethical companies or was he just acting to simply obtain financial gains, as the Act awards individuals a share of the winnings when they seek fraud damages on behalf of the government?All things considered, PricewaterhouseCoopers LLP could have avoided this multimillion dollar lawsuit and scandal if only it had maintained its corporate l egitimacy by observing all laws and regulations, and practicing good ethical principles towards its stakeholders. plant life CitedAccountingWeb. PwC to Settle Travel Expenses Lawsuit for $54.5 Million. 23 December 2003. Web. 28 September 2014. Carroll, Archie B and Ann K Buchholtz. Corporate Governance Foundational Issues. Business & Society Ethics, Sustainability, and Stakeholder Management. South-Western Cengage Learning, 2012. 94-120. Paper. Carroll, Archie B and Ann K Buchholtz. The Travel Expense Billing Controversy and False Claims Act. Business & Society Ethics, Sustainability, and Stakeholder Management. Ohio South-Western Cengage Learning, 2012. 628-31. Paper. Weil, Jonathan. Court Files Offer Inside Look At Pricewaterhouse Billing Clash. The Wall avenue Journal Online (2004) 1-4. Web. 28 September 2014.