Question

You are the accountant for the Best Outdoor Living company which manufactures various outdoor furniture. The furniture is sold by specialty stores and through internet outlets. You are responsible for reviewing costs and creating standards costs based on the information you have reviewed. One of your former colleagues has recently started a company to collect and sell data on industry benchmarks. You are offered the chance to receive benchmarks from other outdoor furniture companies for free if you will provide the standard and actual costs for the last three years of your company. As creation of the standards is a tedious process, you feel this data would be helpful in your job. Review the IMA’s ethical guidelines, under Reading Preparation and identify the conflict with the guidelines. What are the relevant factors in this situation and how you should handle this, and what you would recommend to the Controller

Answer 1

Management accountants continually face ethical challenges.The IMA has developed principles and standards to help management accountants deal with these challenges.The principles and standards remind us that society expects professional accountants to exhibit the highest level of ethical behaviour.The IMA adopted a new statement on ethical professional practice in 2005 which requires management accountants to

- maintain their professional competence

- preserve the confidentiality of the information they handle

-uphold their integrity

- perform their duties with credibility.

The IMA suggests the management accountants first follow their company's established policies for reporting unethical behaviour .If the conflict is not resolved through the company's procedures ,the management accountant should consider the following steps .

1. Discuss the unethical situation with the immediate supervisor unless the supervisor is involved in the unethical situation.If so notify the supervisor at the next higher managerial level .If the immediate supervisor involved is the CEO ,notify the audit committee or board of directors.

2. Discuss the unethical situation with an objective advisor ,such as an IMA ethics counselor.The IMA offers a confidential "ethics hotline" to its members.Members may calk the hotline and discuss their ethical dilemma .The ethics counselor will not provide a specific resolution but will clarify how the dilemma relates to the IMA statement of ethical professional practice

Management accountants must comply with four ethical standards

1. Maintain professional competence

2. Preserve confidentiality of information

3. Upload their integrity

4. Perform duties with credibility