Question

Q1:-

EXERCISE 1-4 Ethics and the Manager Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of direc- tors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses Required: 1. According to the IMA's Statement of Ethical Professional Practice, would it be ethical for Perlman not to report the inventory as obsolete? Would it be easy for Perlman to take the ethical action in this situation? (CMA, adapted) 2.

Q2:

Please answer the following questions

Answer 1

Q.1

1. According to the IMA's statement of ethical professional practice, it would be unethical for Perlman to not reporting the inventory obsolete. It is obligatory to report all the material facts, obsolete inventory in this case.

2. In applying the Standards of Ethical Professional Practice, the member may encounter unethical issues or behavior. In these situations, the member should not ignore them, but rather should actively seek resolution of the issue. In the given case it would not be easy to take action as the consensus from others was to ignore reporting this inventory as obsolete.

Q.2

Ethics and Decision Making

It’s my pleasure to inform you that Dr. Candler has actively served for 10 years at Mountain State University as a professor of accounting under my chairmanship in the Department of Accountancy. He is very obedient and we have had no personal problem with him. He is a passionate teacher who is determined to rendering his duties and responsibilities effectively. He has been consistently and uniformly regarded by students as an awful teacher.

However, despite the good personal character, his teaching abilities have had criticism from students. Over the past ten years, we've had complaints from students claiming that his teaching methodology was not very satisfactory to them. We took the initiative of observing his classroom teaching and all members concur that his teaching skills are poor.

I believe my response to the inquiry is ethical because I believe offering Dr. Candler a job is a big risk going by the information I have just given to you. My sentiments are neither enticed in any way nor do I have personal differences with him, I’m only fulfilling my professional responsibility in agreement with ethical practices. It will be unethical for me to provide non-factual information that may come to harm your institution’s quality of education and especially the students’ studies.

Ethical practices outline the need for professionals to have a good character. The following are the characters required to consider a person as trustworthy, respectful, caring, responsible, fair, and more importantly, a good citizen. Guided by these principles your institution can do well even without the services of Mr. Candler.