1-A3 Professional Ethics

Exhibit 1-7 on pages 26?7 lists four main categories of ethical standards for management accountants: competence, confidentiality, integrity, and credibility. For each of the following situations, indicate which of these four should influence the manager and what the appropriate action should be:

1. At a dinner party, a guest asked a General Mills manager how a major new cereal was doing. The manager had just read a report that said sales lagged much below expectation. What should he say?

2. Felix just graduated from business school with an accounting major and joined the controller’s department of Pioneer Enterprises. His boss asked him to evaluate a market analysis for a potential new product prepared by the marketing department. Felix knows very little about the industry, and he never had a class to teach him how to make a market analysis. Should he just wade in without asking for help?

3. Mary Sue prepared a budget for a division of Southeastern Electronics. Her supervisor, the division manager, was not happy that she included results for an exciting new product that was to be introduced in a month. He asked her to leave the results for the product out of the budget. That way, the financial results for the product would boost actual profits well above the amount budgeted, resulting in favorable reviews for the division and its managers. What should Mary Sue do?

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