Please help with : CA 24 -11 (Disclosure of Estiamtes) Nancy Tercek, The financi

Question

Please help with :
CA 24 -11

(Disclosure of Estiamtes)  Nancy Tercek, The financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2010 and 2011.  The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a hefty gain for the 2-year period.  Tercek is in the process of issuing a media release that empasizes the efficiency of Romine Manuafacturing in controlling cost.  Margaret Lilly knows that the difference in ratios is due primarily to an earlier company decision to reduce the estimates of warranty and bad debt expense for 2011.  The controller, not sure of her supervisoir's motives, hesitates to suggest to Tercek that the company's improvement is unrelated to efficiency in controlling  cost.  To complicate matters, the media release is scheduled in a few days.

Instructions

a)  What, if any, is the ethical dilemma in this situation?

b) Shoudl Lily, the controller, remain silent?  Give reasons.

c) What statkeholders might be affected by Tercek's media release?

d) Give your opinion on the following statement and cite reasons: "Because Tercek, the vice president is most directly responsible for the media release, Lilly has no real responsibility in this matter."

Explanation / Answer

a) The ethical dilemma in this sitaution is that the controller is not sure of her supervisoirs motives and is hesitates to suggest the companies improvement is unrelated to effciency is controlling cost but by reduce of the estimates of warrenty and bad debt ecpence for 2011

b)The controller, may remain sailent, because both of them reviewing companies financial ratios forthe years 2010 and 2011

c) The statkeholders might bea affected by Trecek's media release because the companies improvement is unrelated to efficiency in controlling cost.

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