Question

To enable learners to explain what ethical behaviour means to managers and management accountants.

REQUIREMENT

Ethical behaviour for managers and management accountants

The following are THREE (3) case scenarios pertaining managers’ / management accountants’ roles in ethical behaviour. Discuss briefly the ethical response to each of these cases.

Case 1

Mr. Barry is the management accountant of a company that has a contract with a supplier that is paid on the basis of a percentage of a volume of a certain product. He has recently found a past error dated three years backs that will have caused a loss to the supplier. Mr. Barry intends to address the issue openly and compensate the supplier directly, however management prefers to adjust the future reports to make up for the difference.

                                                                                                                                                (5 marks)

Case 2

Ms. Lina is the finance manager of ABC Sdn. Bhd. that has performed well enough to receive an acquisition approach from a multinational corporation, despite ABC Sdn. Bhd.’s rather disappointing income for the current quarter. The finance director wants Ms. Lina to exaggerate the revenue forecast and hopes that the takeover can happen before the inconsistency between the forecast and actual results becomes evident.

                                                                                                                                                (5 marks)

Case 3

Mr. Ahmed works in a small consultancy firm that has suffered a large income decline. During the current month, a contract was not renewed and it seems quite clear that the firm needs to go into insolvency. One of the firm’s directors is demanding to have her expenses settled as a top priority. These have not been authorized especially since there are no supporting documents, despite the firm’s policy and repeated requests.

            (5 marks)

Answer 1

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