Mary Branson is the Division Controller and Robert Carson is the Division Vice President of Chandler Manufacturing Company. Due to pressures to meet earnings estimates for 2019, Carson instructs Branson to record as revenue $3,000,000 of orders for computers that are still in production and will not be shipped until January 2020.
Required:
The following are the four professional standards for ethical conduct developed by Institute of Management Accountants (IMA):
Standard to consider:
Credibility standard insists the IMA members to communicate information fairly and objectively. It also has a clause to disclose all the relevant information that could influence the user's understanding of the reports.
Recording the revenue of $3,000,000 which is not earned during the year 2019 would influence the user’s understanding and decision making. So, Branson should consider the credibility standard in defending her course of action in this matter.
Ethical conflict:
If Carson still insists that the revenue should be recorded in 2019, then Branson should follow the organization's policies on the resolution for such conflict. If the organization’s policies do not resolve the conflict, Branson should consider the following:
Mary Branson is the Division Controller and Robert Carson is the Division Vice President of Chandler...