Ethics In Public Budgeting Accounting Assignment Paper (Essay Sample)

ETHICS IN PUBLIC BUDGETING
Name
Institution
Date
Ethics in Public Budgeting
In various organizations, financingfor carrying out the functions is sometimes acquired through funding. There are ethical considerations involved,however, in the utilization of funds, mainly focusing on appropriately designating the acquired money. To illustrate the ethical issues surrounding funding, the Sherman’s article “Education charity to pay millions for misusing funds”is analyzed. First, a brief summary is provided, followed by the detailed examination of the ethical issue raised, and the effects of this issue on the future budgeting requests by the organization.
Summary
Sherman (2013) gives the account of the New York State receives a settlement of $7.7 million fromthe Pearson Charitable Foundation (PCF). According to the law, a non-profit organization should not ‘misuse charitable assets in order to benefit their affiliated for-profit corporations’ (Sherman, 2013).The authorexplains that PCF, a non-profit organization,used funds in a manner that gave financial advantage to the Pearson Inc. (PSO) an affiliated for-profit organization and thus broke the law.
Specifically, according to the article, PCF is an education charity whichaims to provide free learning opportunities for people. However, the charity developededucational materials,which would be in demand almost everywhere in the U.S., for commercial sell through PSO. (Sherman, 2013).Furthermore, some of theconferencesorganized by PCF for educational purposes were attended only by PSO personnel and no other for-profit organizations. Thus, as Sherman (2013) indicates, the information acquired through these conferences was directed towards thefinancial gain of PSO.
Ethical issue related to misuse of funding
According to Alexander (1999), the misuse of funding involves using funds beyondthe intended purpose of the organization (p. 550). Thus, the main ethical issue in this case is the utilization of the charity funds for activities, specifically the development of educational materials and the organization of conferences (Sherman, 2013),with the aim of financially benefiting an associated corporation.The PCF, by giving advantages to PSO instead of following its charitable educational purposes, has misused its funding.
To emphasize, the affiliation between the PCF and PSO should not influence the financial decisions of the former. As Smith (2003)indicates, oversight of ethics officials is justifiable and necessary to ensure the legitimate appropriation of funding (p. 633). Consequently, the investigation by the State of New York revealed misuse of funding and highlighted the need for such oversight.
How misuse of funding may impact future budget funding requests
In order to solicit funds, an organization should have quite a good reputation. The reputation depends on the ability of the organization to fulfill its intended purposes successfully. Further, as Alexander (1999) states, in the budgetary process, the issue of trust is one of the most important concerns (p. 555). For a non-profit organization, such as PCF, maintaining a good reputation is essential as all of ...