One of my duties at work was to verify the travel expenses submitted by contractors. I generally cleared the mileage expenses on trust, as the contractors were professionals. One day, I offered a ride to one of the contractors because his car failed to start. Expense reports were due the next day and, out of curiosity, I checked the contractor’s report. To my surprise, he had been charging twice as many miles as his true commute. He had overcharged the company about $100 since joining the project a month earlier.
I pondered the situation all afternoon. I knew that $100 was not a big amount, and reporting this incident would mean expulsion of the contractor. Such expenses are not always audited in a big firm, and discrepancies may even be ignored at times. Should I report the matter?
Contributed by Arpit.
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Ethical Decisions 
In response to Ethical Dilemma posted by Arpit, the act being carried by contractor is not ethical. It fails generalization test as the contractor is probably cheating assuming that he will not get caught as his act will go unnoticed. But if everyone starts cheating, the company will start finding such errors and may even punish the offenders.
Also, decision of not informing about the act because the contractor might expelled is also not rational. The assumption here is that nobody else other than you will find out about the act of contractor. But this is not generalizable and hence not rational.
So the act of cheating by contractor must be reported.
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Arpit, thank you for posting about this dilemma. As a consultant in my previous career, I was faced with these sort of situations many times and now that I think back upon it, I may not have made the most ethical decisions each and every time.
In your particular case, about the contractor charging too much money for daily mileage, let’s evaluate certain tests to determine whether your act of reporting him knowing the consequences was ethical.
First, the generalization test: The action of charging extra mileage does NOT pass this test. If everyone in the company decided to take part in this activity, it would be caught on to very quickly and a new method or punishment for such actions would be implemented.
Next, the utilitarian test: The action does in fact benefit the person who is charging extra mileage to the project. However, by doing so, they are reducing the amount of money left available to the project that is most likely going to benefit a majority of people including the offender themselves. Therefore, this action fails the utilitarian test.
Arpit, since the action of you reporting this individual will stop the aforementioned from occurring again, I believe that your actions are indeed ethical. Also, as the expense manager of the project, it is you duty to do so.
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The contractor’s behavior is certainly ungeneralizable and unethical, as Sameer points out. The issue here, though, is whether you have an obligation to report the contractor. I can’t say in general that failure to report instances of expense padding is ungeneralizable. It depends on the reasons and circumstances.
But you say that verifying expenses is one of your duties at work. You have an agreement with the company to carry out your duties in exchange for your salary. Breaking an agreement merely for convenience is ungeneralizable and unethical.
Your reason is not merely convenience, however. There seem to be two reasons: there is a small amount at stake, and reporting it would result in expulsion of the contractor. This may show that we can make a utilitarian argument for failure to report. Termination of a contract on a minor matter would probably cause more harm than good, even for the company. But failure to report has to be generalizable as well as utilitarian.
Fortunately, we don’t have to decide whether it is generalizable, because there is a less questionable option that probably creates even more utility. You can give the contractor a private warning, and tell him to make up for the overcharge by underreporting future travel, or else you will turn him in. This keeps your promise to report any overage to the company, because there is no net overage.
Failure to report is therefore generalizable, unless it involves deception. If there is a clear understanding in the company that you are to report any padding, even if it is corrected next week, then failure to do so deceives the company. The same goes if you must fill out a report every week certifying that there was no padding that week. This kind of deception is ungeneralizable, because it won’t serve its purpose unless the company believes you, and the company wouldn’t believe you if deception on such matters were universal.
However, if your job is to provide general oversight of contracting expenses and to make sure that the company is correctly billed in the end, then there is no deception here, and a private warning to the contractor is not only permissible, but obligatory because it maximizes utility. You must report the padding, though, if the contractor fails to make up for it.
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