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Ethics in Accounting

January 26, 2007

The headline in the Friday Jan 26 2007 detail how Gloria Orapello rang up $383,788 in personal charges on her DISD charge card. The theft by credit card occurred over a period of 27 months. Apparently half of the 1,200 employees are guilty of some level of theft by credit card. Now this raises several questions.

Clearly no adequate system of internal control was in place at the time the cards were issued. Why not? Where were the internal and external auditors?

Clearly no one had any oversight over these employees, even the simple expedient of limiting the card to $500 would have helped.

Ms. Orapello says she "greatly regrets her conduct in every way," according to her lawyer. No doubt she regrets getting caught but what are we to do with Ms. Orapello now? What is justice? Perhaps we should call on Prof Senderson in Criminal Justice, what was this woman thinking would happen?

Ethics requires a framework of reference. What standards are violated? Who are the stakeholders? What are the consequences? Under different theories of ethics, justice, rights, etc. what harm is done and to who? She could face ten years in jail and $250,000 in fines, DISD has apparently paid the charges. So we throw her in jail, if so how would she pay the fine? Do we need a new sort of justice for such a crime, how should she pay for her crime? And what do we do with the others?

Now, what is the collateral damage? Is there further damage? Suppose DISD floats a bond issue, should we trust them to safely spend the money? For that matter can they be trusted to even spend the current level of property taxes? What does this say about the general level of regard for ‘education professionals?

Please read the complete article, we will discuss this in class and examine it further in auditing this next fall.

DLE

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6 responses to “Ethics in Accounting”

Guadalupe B

January 26, 2007

This topic has really irritated me since it started to come to light last year. It is really amazing to me how much money was even allowed to be granted on these credited cards. Why do they need them anyway? I mean we’re talking about office personel. Even in my daughter’s girl scout troop the leader has to account for every penny the girls bring in. Also, if this is the type of money the “little” people in DISD are spending, what must the administrators be spending? There is something seriously wrong within the district when an outside sorce has to find wrong doing. As for Gloria Orapello and everyone else who is found guilty of similar charges, I think they should be thrown in jail. After losing their jobs their going to be blacklisted anyway and will never be able to payback those obsene amounts of money, so make them an example to all. That is the only way this school district is going to improve. If we are to expect the best of our kids, then we must exhibit the best from ourselves. Maybe DISD should start with a spelling lesson….can anyone spell INTEGRITY!

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Dennis Elam

January 27, 2007

Great Post Guadalupe! Indeed the DMN has been all over DISD as you say since last year. I will do some research on who is doing the external audit. As you say, the newspaper should not be the internal audit dept for DISD!
DLE

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Jason Raper

January 28, 2007

And we wonder why there are 3 signatures needed just to get a check request for expenses at our company? It is amazing that this went unnoticed for so long. However, it does not surprise me.
All we seem to hear is that there are no funds to pay teachers higher wages; no funds for computers; no abilty to lower school lunch prices. I guess we know where the funding is going.
DISD represents all of the inner city schools in the Dallas area. From the looks of these schools, they can’t take this kind of hit to their budget. They look so underfunded it almost makes you feel sad for the children who have only this to attend.
My personal opinion is that they make all of the employees involved in the scandal go to jail. As their punishment….spend all day long as the maintenance crew for each of these schools and clean them up! It also disturbs me that the district is going to have to spend an extra $500,000 just to investigate further. What a waste of education dollars. Lead by example not by temptation.

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Kimi

January 30, 2007

I am amazed that it took three years to finally figure out that nearly $400,000 of the districts money was being used for shopping sprees. Where are the internal auditors? Where were the internal controls that were supposed to prevent this? Better yet, why doesn’t the school have a forensic accountant on the payroll? I think if employees are just aware that their actions are being watched and there is a possibility of being caught, employees such as Gloria Orapello wouldn’t be so carefree about spending the taxpayers money. She should go to jail, she committed a crime. I think we could all agree that many criminals regret their choices. But she should still pay her debt to society. As far as the $500,000 goes, that money would be better spent getting a forensic accountant in the district to do random audits.

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Pragya Sitoula

January 30, 2007

Being an international student, when I compared the business in my country (Nepal) and in USA, I found similarities in everything. Ethical and moral values provide a base to society on how to function, live and work within the society. Accounting firms have come to see auditing not as a governmental mandate and matter of public trust, but rather as an opportunity to gain consulting and other business fees from the very management they work with. Today, almost anything goes in the business world; we need to find real ethical systems to enforce. We need to investigate our sense of right and wrong in the business world. So, in my understanding about the issue of “Gloria Orapello”, she did commit a crime but she got chance to commit the crime from the environment she is living with. Before punishing the criminal we need to find the actual root from where the crime starts, though it’s impossible. But it’s not a bad idea to TRY!!!!!!

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Dennis Elam

January 31, 2007

The statement by Principal Govan seems to say it all-I won’t be a scapegoat or fall guy. So if 600 are guilty, it appears that all 600 are somewhat confident that DISD will not prosecute or fire all of them, safety in numbers eh? We can only guess at this point but apparently the, well everyone is doing it, why be left behind mentality swept the entire 600 with cards. And if DISD said or did nothing for some 18 months, one can start to see how such a thought could take hold. Mark Davis on WBAP reports that students are taking up the cause of the principal because they like him asking if he has violated a specific rule.
Well here is the big issue in ethics. Are you simply rule based, that was enron’s defense, we did not break a rule, or was Fulghum right, all I need to know I learned in kindergarten, we all know right from wrong. There are now some 150 or so FASB pronouncements and I don’t know how many audit rules, a rule for everything and everyone eh? That’s not the answer.
Yet another collateral issue here, what sort of role model have these 600 become for the students?
This from the DISD site.
Dr. Michael Hinojosa was named general superintendent of the Dallas Independent School District April 28, 2005. His selection brings him full circle to the school district he attended as a student and where he began his career as a teacher.
So he arrived smack dab in the middle of all this. Well, Mike, here’s your chance to make a real statement and conceivably make some real changes. What will it be? And what will the Board do, just not run for office again? Simply firing a couple of folks, and re assigning the rest while some Board members choose not to run will send the ‘well this will all blow over in a few months and then back to business as usual.’ Hmmmm. Meanwhile we have a brand new Dist Atty, what does he say about all this?
DLE
DLE

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