This post is a response to a classmate’s blog: https://blogs.ubc.ca/angela11389/

Procter & Gamble (P&G) was accused of inflating import prices by $140 million to avoid paying taxes in Argentina, and as a result, Argentina took away P&G’s ability to do business within the country. P&G allegedly “funnelled currency abroad and hid income that was subject to tax in Argentina.” A consequence of this alleged tax fraud is the declination of the company’s stock. P&G’s shares were down 0.57% to $86.76 not long after allegations of tax fraud made news.

As discussed in this course, business frauds can be determined by looking through financial statements. Companies can deliberately misrepresent their financial condition with inaccurate or false information to deceive financial statement users. Frauds tend to be committed based on three theoretical factors: situational pressure, opportunity, and rationalization. In P&G’s case, situational pressure is predominant because the company can achieve “personal gain” by not paying taxes.

In Angela’s post, she mentions two psychological approaches as to why people are lured into committing business frauds – tunnel vision and self-serving bias. Tunnel vision is when people are blinded to ethical concerns because they are too focused on their goals, and self-serving bias is the idea of people thinking that they are superior to others, causing them to think that they can “get away” easier. Furthermore, Angela stressed that business ethics are the key to economic continuity, and I strongly agree with her statement.