please help !! You are an accountant in the budgetary, projections, and special
ID: 2444107 • Letter: P
Question
please help !!You are an accountant in the budgetary, projections, and special projects department of American Conductor, Inc., a large manufacturing company. The president, William Brown, asks you on very short notice to prepare some sales and income projections covering the next 2 years of the company’s much heralded new product lines. He wants these projections for a series of speeches he is making while on a 2-week trip to eight East Coast brokerage firms. The president hopes to bolster American’s stock sales and price.
You work 23 hours in 2 days to compile the projections, hand deliver them to the president, and are swiftly but graciously thanked as he departs. A week later you find time to go over some of your computations and discover a miscalculation that makes the projections grossly overstated. You quickly inquire about the president’s itinerary and learn that he has made half of his speeches and has half yet to make. You are in a quandary as to what to do.
Address the following questions:
1. Please define the word “ethics” and summarize what issues/ramifications might apply to this example.
2. What are the consequences of telling the president of your gross miscalculation, both ethical and non-ethical?
3. What are the consequences of not telling the president of our gross miscalculations, both ethical and non-ethical?
4. Are there other ethical implications or issues that you and the president need to consider in this situation?
Explanation / Answer
Question 1) Ethics can be thought of as recognizing constraints on the pursuit of self interest. Because this is a professional setting, professionals are expected to adhere to basic principles of ethical conduct as well as any code of ethics set out by a professional body. The ethical issues for this particular scenario include: 1) Professional competence and due care in performing the analysis that could mislead many potential stakeholders (brokerage firm) 2) Integrity - this will arise as the accountant determines whether they should be straightforward and honest about the mistake made. Also the President will have to consider whether to continue presenting those statistics or not. 3) Conflict of interest - potential ramifications on the accountants job vs. public interests - i.e. brokerage firms unknowingly reporting to the public better than actual results Question 2) Possible consequences: 1) President and firm looks unprofessional/incompetent due to the gross mistake and face an ethical dilemma on whether to continue with the presentation as is or notify all potential stakeholders 2) This incompetence combined with the downward projections could cause loss of potential clients 3) Possible sanctions on the accountant due to mistake e.g. loss in pay, poor ratings, developing a "reputation" for not being able to withstand the pressure of the job 4) Potential stakeholders are misled into investments they believe are safer than they actually are Question 3) 1) Firm stock sales and prices rise, due to increased interest due to the presentation of the projections 2) Accountant appears to have completed job competently , but learns from mistake Question 4) President and accountant may have to consider conflicts of interest as remuneration may be stock based, and any downgrade of projections could have an impact on their earnings.
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