Accounting Ethics: The Responsibility To Perform Professionalism

Topics: Corporate governance, Management, Ethics Pages: 2 (385 words) Published: February 26, 2013
Ethics 1
1. The issue in this case is the projected quarterly profits were unacceptable and expense need to be reduced at the oil exploration division where Judy works. The internal users of the company have the right to know about this information, but Tim Wilson, the divisional manager, told Judy to capitalize the expense by assign the exploration and drilling costs of four dry holes to those of two successful holes. The manager further said that if the capitalize the expense is wrong, it can be corrected in the annual financial statements, and he wants to make this quarter’s profit look better. I believe that Judy should not accept Wilson’s suggestion. The statement, under competence, on code of conduct for management accountants says that “Each member has a responsibility to perform professional duties in accordance with relevant laws, regulations, and technical standards.” It explains Judy should keep the expense as an expense in order to be appropriate, reliable information for the company. Judy should “disclose all relevant information that could reasonably be expected to influence an intended user’s understanding of the report, analyses, or recommendations.” 2. Suppose Tim insists that his suggested accounting treatment should be implemented, Judy should “Discuss such problems with immediate superior except when it appears that superior is involved, in which case the problem should be presented to the next higher managerial level. If a satisfactory resolution cannot be achieved when the problem is initially presented, submit the issue to the next higher managerial level. If the immediate superior is the chief executive officer or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive committee, board of directors, board of trustees, or owners. Contact with a level above the immediate superior should be initiated only with the superior's knowledge. Assuming the superior is not involved. Except where...
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