Ethics in Accounting Mistakes
March 9, 2014
The following report will discuss Case 1-8 A Faulty budget included in chapter one of the text book Ethical Obligations and Decision Making in Accounting: Text and Cases, 2nd Edition. In this case, Jackson Daniels is an accountant for Lynchberg Manufacturing and had been employed there since graduating college a couple years back. Daniels was responsible for creating the sales budget for sales of machines manufactured by the company. He admittedly made a mistake in the budget which resulted in sales being budgeted 25% higher than the prior year. After the budget was finalized, actions were taken by other employees in the company to prepare for the increased sales projections which included hiring employees to accommodate for the anticipated increased demand. Daniels is faced with the decision of owning up to his mistake to protect the interest of the company or keeping this secret to protect his own interest of keeping his job. Daniels should carefully evaluate the consequences of the decision at hand. The company could suffer from this mistake if he is not honest about it. The sales budget could be the basis for the company to enter in legal contracts for funding with banks or other outside investors. The sales manager could potentially lose his job for not meeting the annual sales budget. The new employees hired could find themselves out of a job because there really is not demand for manufacturing. If Daniels feels he has a duty to act with good moral character, he should evaluate how his decision carefully. In practicing good ethical behavior, one should have values that include trustworthiness, respect, responsibility, fairness, caring, and citizenship. These are the six pillars of character identified by the Josephone Istitute of Ethics. Being trustworthy includes being honest and acting with integrity. Omitting relevant information, such as keeping the mistake a...
References: Mintz, Steven. Ethical Obligations and Decision Making in Accounting: Text and Cases. 2nd Edition. McGraw-Hill Learning Solutions, 2011.
Code of Professional Conduct. Retrieved from http://www.aicpa.org on 3/9/14
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