Question

1. Suppose, as CEO of the Smart Phone company, that you were close to reaching a sales target for this period but needed to ship as many products as possible before year end. You asked the VP Finance, who is a Certified Management Accountant, to arrange with the VP Marketing for early delivery of orders currently scheduled for delivery in the next period. The VP Finance agrees. According to the Institute of Management Accountants’ Statement of Ethical Professional Practice, is this practice unethical? Which professional standards are relevant in this situation?

2. When setting the ethics level for your company during the simulation, which factors were most important in your decision about which ethics level to choose? Which groups of people were likely to be affected by your decision?

3. During the simulation several companies set different ethics levels. Did you notice any connection between the ethical level and performance of your company or other companies? Consider both financial and nonfinancial performance. Were there any conflicts between achieving high ethics and high performance? If so, how did your company or other companies in the simulation resolve the conflict? In retrospect, how should your company have resolved conflicts between social responsibility and financial performance? Give examples of particular decisions you made.

Answer 1

Answer to Question 1.

As given in the question, it is a case of pre-scheduling deliveries (motivated by booking sales earlier)

than was planned before. What is not so clear whether this really contravenes any law, any pre-agreed arrangements/contracts etc. If the company had scheduled such deliveries per its previous plans/expectation and had intimated so to customers --- then in an altered as situation such early deliveries would mean providing services better than promised before (hopefully leading to customer delight). At the outset, no legal provisions or covenants with other parties are broken.

However, if this means (the question remains silent re this) that there would be any violation of ;eagl permits obtained for shipment or exceeding other regulatory norms --- that would be illegitimate and would come in contradiction of ethics related provisions. If such is the case, the VP Finance should mention and highlight the matter the CEO and stress upon its consequent on the Company in short-term and long-term. He/She shoud refrain from proceeding with the shipment plan and bring the matter to the notice of higher authorities, if pressed further.

From the given facts, no such concerned are as such expressed. It is for the person standing with the exact situation to judge whether there could be any other issues that came in place.

The relevant standards from the IMA Statement of Ethical Practices are as under ----

Under COMPETENCE: Clause 2. (Performing Professional responsibilities per laws, regulations and standards)

Under INTEGRITY: Clauses 2 (Refraining from any conduct that would preclude carrying out duties with professional integrity) and 3 (Abstaining for activities that could discredit the profession).