PROBLEM 1–4 Ethics and the Manager
1. According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for Perlman not to report the inventory as obsolete?
Under the credibility line of the statement of ethical professional practice, it says that each member has a responsibility to disclose all relevant information that could reasonably be expected to influence an intended users understanding of the reports, analysis, or recommendations, and they must communicate information fairly and objectively. Although this is what they as a whole decided to do, does not mean it is ethical. Not reporting this information accurately would be unethical. They would only be doing this to get a bonus, by making their profit, and sales growth look better. This would be cheating and would benefit the management personnel, but not the company. If Perlamn feels that they are not making an ethical decision, he should then discuss it the first chain on command.
2. Would it be easy for Perlman to take the ethical action in this situation?
It would be easy for Perlman as long as he follows the chain of command. He should first discuss it with the management personnel, and if they do not cooperate, and still no want him to report the inventory, he should then follow the chain of command. He should clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor or other impartial advisor to obtain a better understanding of possible courses of action. He should also contact a personal lawyer.
PROBLEM 1–7 Ethics in Business
1. How would this behavior affect customers? How might customers attempt to protect themselves against this behavior?
When a business is in a situation like this, they will only hurt themselves. The customers will lose faith in them, and protect themselves by not coming back. They could also report it as unethical, especially if the business was
References: Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2008). Managerial accounting (12th ed.). New York: McGraw-Hill/Irwin.