Question

Response Questions From Part A TOD A) Write 6-7 Sentences For Your Response: Using the IMA Statement of Ethical Professional Practice below as an ethical framework, answer the following questions: o What are the ethical issue(s) in this situation? o What are Yang's responsibilities as a management accountant? c) We budget? Why or why not? Response: Dis Write 6 Sentences For Your Response: Would your answer differ if Gutierrez Company were instead owned by one individual instead of being publicly held? Why or why not? Write 6 Sentences For Your Response: Would anyone be harmed if slack were to be built into the budget? Why or why not? Write 6 Sentences For Your Response: Discuss the specific steps Yang should take in this situation. Refer to the IMA Statement of Ethical Professional Practice below in your response. D ) Situation: Gutierrez Company, a publicly held corporation, operates a regional chain of large drugstores. Each drugstore is operated by a general manager and a controller. The general manager is responsible for the day-to-day operations of the store, while the controller is responsible for the budget and other financial tasks. The general manager, Tracie Kappan, has been at Gutierrez Company for several years. Employee turnover is high at Gutierrez Company, just as it is in the retail industry in general. Kappan just hired a new controller, Min Yang. Yang was asked to prepare the master budget. Each retail location prepares its master budget once a year and then submits that budget to company headquarters for approval. Once approved by headquarters, the master budget is used to evaluate the store's performance. These performance evaluations directly affect the managers' bonuses and whether additional company funds are invested in that location. When Yang was almost done preparing the budget, Kappan instructed him to increase the amounts budgeted for labor and supplies by 20%. When asked why, Kappan responded that this budgetary cushion gives store management flexibility in running the store. For example, because company headquarters tightly controls operating funds and capital improvement funds, any extra money budgeted for labor and supplies can be used to replace store furnishings or to pay bonuses to help to retain good employees. She explains that the chance of getting extra funds from company headquarters is not good; this "cushion" is usually the only opportunity to replace store décor or to pay bonuses to key employees. Kappan also needs extra funds occasionally to make “under the table” payments to employees as incentives to work extra hours or to keep them from leaving for a higher-paying job. Yang feels conflicted. He is eager to please Kappan, and he is wondering what he should do in this situation.

Answer 1

Ans A

Ans (i) The ethical issue in the Gutierrez company is not maintain the principles and standards of the company by the management. So, if master budget is not preparing proper then the company never get the highest achievement. The management should be honest to make the budget. The Company should not maintain the ethical professional practice.

Ans (ii) Yang's responsibilities as a management accountant is prepare master budget as per the principles and standard of the company. The management accountant responsibilities is do work with professional manner, and take right decision and decrease the risk of the company. The accountant should be clear, accurate, punctual, supportive and right decision taker.

Ans B. No, because the practice of the Gutierrez company is very good and also a professional. The management is also good and i am happy with the following management is control. They operation of the company is also very well. Therefore, my answer is not differ if Gutierrez company is individual corporation.

Ans C. Yes, if budget is not proper or any mistake is to be done than the company get harmed. The slack in budget may harmed company, as well as management. The slack in budget may harmed the company profit also. So, If budgetary management is not proper the whole management and company also.

Ans D. The specific steps yang should take in this situation is maintain the principles and standards. The yang should do there work fairly and honest. The yang do there work on certain terms and condition of the company. The responsibility of yang is prepare the master budget very professionally and accurately. The yang should be punctual and clear. The yang also managed the risk. The yang specific step in this situation is should be clear, honest and right decision taker to maintain the level of the company.