Introduction: All managers need to be aware of addressing ethical dilemmas that they will encounter in their professional lives.
The following Course Outcome is assessed in this assignment:
GEL-7.02: Apply ethical reasoning to ethical issues within the field of study.
Read the scenario and then follow these steps to complete Assignment 2.
First: Research the accounting code of conduct requirements on the internet following the Institute of Management Accountants (IMA) guidelines. Make sure to cite at least one source from those provided and reference them (in your separate reference page).
Second: Note how the IMA code of conduct requirements of (1) competence, (2) confidentiality, (3) integrity, and (4) credibility apply to this scenario.
Third: Then review the tutorial located in the “Ethical Approaches” presentation provided.
Fourth: Address the following checklist questions in a 2- to 3-page APA formatted original essay with an additional title and reference page to the Dropbox.
Scenario:
Read the textbook scenario (Ethics Case, p. 18–51) and address the checklist questions located below:
René Kelly, president of RL Industries, wishes to issue a press release to bolster his company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other operating statistics for RL Industries’ first quarter financials and operations.
Two days after you provide the data requested, Erin Lourdes, the public relations director of RL, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Erin. In the news release, the president highlights the sales increase of 25% over last year’s first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. She also emphasizes that production was up 50% over the prior year’s first quarter.
You note that the press release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that although the current ratio improved, the accounts receivable turnover fell from 12 to 9. Nor is there any mention that the quarter’s reported profit would have been a loss had not the estimated lives of RL plant and machinery been increased by 30%. Erin emphasized, “The press wants this release by early this afternoon” (Weygandt et al. 2021, p. 18–51).
Checklist:
(1) Who are the stakeholders in this situation?
(2) Apply two or more accounting codes of conduct to answer the following questions:
Is there anything unethical in President Kelley’s actions?
Should you as controller remain silent? Does Erin have any responsibility?
(3) Then compare your response regarding the accounting code of conduct questions above to the tutorial’s ethical approaches.
Which accounting code of conduct responses to questions “a” and “b” above would be supported by two of the ethical approaches in the tutorial? Explain.
