Accounting Ethics Paper

  1. What is Ryan’s ethical dilemma? Based on the VP of Sales’ proposal, what is being asked
    of Ryan, the Chief Accountant? When answering this question, address the ethical
    issues underpinning the request by considering what you know about the Chief
    Accountant, the VP of Sales, their goals, the nature of their relationship, and the goals of
    the organization.
  1. Who are the stakeholders that will be affected by how Ryan responds to the VP of Sales
    proposal? Describe how the request might affect each of the stakeholders? When
    answering this question, think beyond the people or organizational positions specifically
    identified in the case.
  2. Discuss the organizational factors the Chief Accountant should consider in deciding how
    to handle the VP of Sales’ request. When answering this question, think about Ryan’s
    responsibility to the firm. What are the things Ryan should consider about the firm
    when deciding how to respond to Sid’s proposal?
  3. Discuss the professional standards the Chief Accountant should consider in deciding
    how to handle the VP of Sales’ request. Think about the specific professional standards
    itemized in the IMA’s Statement of Professional Ethical Practice. Which standards apply
    to Ryan in this situation?
  4. Identify the Chief Accountant’s alternative options for responding to the VP of Sales’
    proposal. Discuss the possible consequences and the organizational factors and
    professional standards applicable to each option. When answering this question,
    consider that Ryan could do any one of many different things, such as, agree, disagree,
    remain unsure of how he should respond to the proposal, propose an alternative, etc.
    The case is not explicit about what corporate guidance exists to resolve ethical
    dilemmas, so you may have to consider hypothetical alternatives.
  5. Which of the options would you recommend to the Chief Accountant? Explain your
    reasoning for selecting that option. Discuss your recommended course of action with
    respect to resolving the ethical dilemma and the effect on the Chief Accountant. You
    should clearly outline and discuss your recommendation for Ryan’s course of action.
    The course of action should go beyond the limited and specific actions indicated by the
    IMA’s Statement of Ethical Professional Practice and should consider: (1) preserving
    good working relations within the organization; (2) improving the organization; (3)
    reducing ethical dilemmas in the future, and; (4) improving Ryan’s image within the
    organization by how he handles this issue.

Model Answer

Accounting Ethics

1.0 Ryan’s Ethical Dilemma

            As the chief accountant, Ryan is being compelled by the vice president of sales to give a false impression of the firm. Sid, the sale’s vice president, is determined to realize a positive contribution of $ 2 to meet the instructions of the Chief Executive officer. The problem is that Ryan is being asked to rearrange the numbers so that they can reduce the fixed cost and hence increase the contribution margin per unit. Doing so will help the VP of sales to satisfy the CEO. However, it is unethical for Ryan to do such an unprofessional thing. Moreover, the goals of the organization are to increase profit margin without interfering with the cost structure.

2.0 Affected Stakeholders

            Sid proposal suggest xxxx should assist in portraying xxxxx testing costs as fixed cost instead of variable costs. Managers of qua xxxx maintenance departments are the first people to be affected. The action would imply that their departments will start dealing with less variable cost items. The vice president of manufacturing will also be affected by xxxx instance, the VP of marketing will have to arrange for the anticipated increased sales including ordering for more raw xxx the human resource department might also need to be updated on the suggested changes. This will help the HRM to hire more workers to meet the anticipated labor demand. 

3.0 Ryan’s Response

            Ryan will xxxx realize that his role is to xxxx data and to advise on financial xxxx such, he must consider the long term xxxx changing the cost structure of the firm. For instance, he must put into consideration the future profitability and liquidity of the firm.

4.0 Ethical Standards

            First and foremost, Ryan must be concerned about xxxx of improving the welfare of the xxxx involves presenting accurate figures and giving proper xxxx he has a responsibility to create healthy relationship between organizational stakeholders. In this regard, he must not give advice that might threaten the future of any employee in the xxxx is his responsibility to reduce cases of such ethical dilemmas arising in the xxxx way he resolve the matter determines his capacity to confront a similar case presented by another colleague in future.

5.0 Ryan’s options

            By agreeing to rearrange the numbers, chief accountant must be prepared for the expected profit reduction in the long run. In that case, Ryan will violate his role of improving the firm. Disagreeing with Sid may threaten their working xxxx such, this might adversely violate Ryan ethical practice of ensuring peaceful working relations within the xxxx the other hand, remaining uncertain may risk the relationship of the sales’ vice president and the CEO. Again, this would violate the role of an accountant of maintaining healthy working xxxx a new employee, Ryan must consider the implication of his decisions on his image. Making the wrong decisions might taint his image among the key people such as the CEO.

Recommendation

             Ryan should arrange a meeting to be attended by the CEO, VP of sales and xxxx an accountant, he will have an opportunity to explain the challenge to the CEO. He will explain that the current market situation cannot allow the firm to make the $2 xxxx Ryan will manage to safeguard his professional principle of preserving a decent working relation within the xxxx addition, he will also safeguard his ethical responsibility of presenting the true and fair position of the company.

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