CH 01 SM

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{\phpg\posx5111\pvpg\posy1799\absw3058\absh719 \b \f10 \fs28 \cf0 \fi577 \b \f10
\fs28 \cf0 CHAPTER 1
\par}{\phpg\posx5111\pvpg\posy1799\absw3058\absh719 \sl-260 \par\b \f10 \fs28 \c
f0 {\fs21 DISCUSSION}{\fs21 QUESTIONS }\par
}
{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \f10 \fs18 \cf0 \f10 \fs18 \cf0
Q1-1. Planning is the development of a consistent
\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 set of actions, resources, and measurements
620 by which the achievement of objectives can
620 be assessed. Planning takes into account the
620 interactions between the organization and its
620 environment in whatever is to be done.
860 Control is the process by which managers
620 assure that resources are obtained and used
620 in an efficient and effective manner to carry
620 out the plan and accomplish the organiza\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 tion's objectives. Control implies that perform\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 ance
measurements
are
reviewed
to
620 determine if corrective action is required.
860 Planning and control are interrelated.
620 Control is carried out within the established
620 planning framework and serves to evaluate
620 conformance to the plan so that organiza\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 tional objectives are achieved.

\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 Q12. Short-range plans usually deal with a period
620 of a quarter or a year, while long-range plans
620 usually cover three to five years. Short-range
620 plans are detailed enough to permit prepara\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 tion of a complete set of financial statements
620 as of a future date, while long-range plans
620 culminate in a very summarized set of
620 expected results or a few quantified objec\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 tives, such as financial ratios.
\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 Q13. Long-range plans contain quantitative results,
620 while strategic plans are the least quantifiable
620 of all plans. Long-range plans usually extend
620 three to five years into the future, while strate\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 gic plans may contemplate shorter or much
620 longer periods. Long-range plans covering a
620 three-to-five-year period would be prepared
620 every three to five years, or might be system\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 atically updated each year to maintain a com\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 plete
plan,
while
strategic
plans
are
620 formulated at irregular intervals by an essen\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 tially unsystematic process.
\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 Q14. Accountability is identical with responsibility
620 accounting. Accountability deals with the dis\par}{\phpg\posx1779\pvpg\posy3253\absw4642\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 charge of an individual's responsibility to
620 achieve assigned objectives within the costs
620 and expenses allowed for the performance
620 and agreed to by the individual. \par
}
Q1-5. The controller does not control, but aids the
620 control task of the managerial levels by issu-
\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 ing reports pointing out deviations from the
620 predetermined course of action.
6. The cost department keeps detailed records
620 of materials, labor, factory overhead, and
620 marketing and administrative expenses; ana\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 lyzes these costs; issues control reports; pre\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 pares cost studies for planning and decision
620 making; and coordinates cost and budget
620 data with other departments.
7. For product research and design, the manu\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 facturing departments need estimates of
620 materials, labor, and machine process costs;
620 for measuring and efficiency of scheduling,
620 producing, and inspecting products, the
620 departments need to know the costs incurred.
620 The personnel department supplies employ\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 ees' wage rates. The treasury department
620 needs accounting, budgeting, and related
620 reports in scheduling cash requirements. The
620 marketing department needs cost information
620 in setting prices. The public relations depart\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 ment needs information on prices, wages,
620 profits, and dividends in order to inform the
620 public. The legal department needs cost infor\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 mation for keeping many affairs of the com\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240
620 pany in conformity with the law.
8. Modern techniques in communications give
620 the controller and staff the means to transmit
620 information in the form of results, analyses,
620 and forecasts in a way never before possible.
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620 Profit opportunities or control actions have
620 been delayed or missed entirely because
620 timely information that might have improved
620 the cost and profit position of the company
620 was poorly communicated.
\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240 \f10 \fs18 \cf0 Q19. The budget is an essential cost planning tool
620 because it (a) supplies information and serves
620 as a standard of performance for cost control
620 by the supervisors responsible for cost; (b) pro\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 vides an easy method for anticipating profits at
620 an anticipated sales level; (c) helps in forecast\par}{\phpg\posx6879\pvpg\posy3253\absw4657\absh9670 \sl-240 \f10 \fs18 \cf0 \fi
620 ing sales, costs, expenses, and profits for a
620 period of one year or more in advance. \par
}
{\phpg\posx6455\pvpg\posy14616\absw359\absh170 \b \f10 \fs18 \cf0 \b \f10 \fs18
\cf0 1-1 \par
}
\sect\sectd\pard\plain
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}}\par}{\phpg\posx720\pvpg\posy811\absw359\absh170 \b \f10 \fs18 \cf0 \b \f10 \f
s18 \cf0 1-2 \par
}
{\phpg\posx9632\pvpg\posy811\absw1088\absh170 \b \f10 \fs18 \cf0 \b \f10 \fs18 \
cf0 Chapter 1 \par
}
{\phpg\posx720\pvpg\posy1799\absw4740\absh1462 \f10 \fs18 \cf0 \f10 \fs18 \cf0 Q
1-10. These standards will not necessarily be able
\par}{\phpg\posx720\pvpg\posy1799\absw4740\absh1462 \sl-240 \f10 \fs18 \cf0 \fi7
20 to prevent management fraud, but they do
20 give internal accountants some guidance on
20 how to proceed if they encounter a question\par}{\phpg\posx720\pvpg\posy1799\absw4740\absh1462 \sl-240 \f10 \fs18 \cf0 \fi7
20 able practice.
\par}{\phpg\posx720\pvpg\posy1799\absw4740\absh1462 \sl-240 \f10 \fs18 \cf0 Q1-1
1. CASB standards: (a) enunciate a principle or
20 principles to be followed; (b) establish prac- \par
}
tices to be applied; (c) specify criteria to be
\par}{\phpg\posx6540\pvpg\posy1799\absw4020\absh1246 \sl-240 \f10 \fs18 \cf0 emp
loyed in selecting from alternative princi\par}{\phpg\posx6540\pvpg\posy1799\absw4020\absh1246 \sl-240 \f10 \fs18 \cf0 ple
s and practices in estimating, accumulat\par}{\phpg\posx6540\pvpg\posy1799\absw4020\absh1246 \sl-240 \f10 \fs18 \cf0 ing
, and reporting contract costs. The
\par}{\phpg\posx6540\pvpg\posy1799\absw4020\absh1246 \sl-240 \f10 \fs18 \cf0 sta
ndards are backed by the full force and
\par}{\phpg\posx6540\pvpg\posy1799\absw4020\absh1246 \sl-240 \f10 \fs18 \cf0 eff
ect of the law. \par
}
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}}\par}{\phpg\posx1680\pvpg\posy808\absw1088\absh170 \b \f10 \fs18 \cf0 \b \f10
\fs18 \cf0 Chapter 1 \par
}
cf0 1-3 \par
}
{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \b \f10 \fs21 \cf0 \fi4233 \b
\f10 \fs21 \cf0 EXERCISES
\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-260 \par\b \f10 \fs21
\cf0 E1-1 The exercise requires two examples of the inseparability of plannin
g and control.
\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-280 \b \f10 \fs21 \cf
0 \fi720 Three are listed here, and the third one gives two illustrations:
0 \fi1080 The most obvious example of the inseparability of planning and control
is
0 \fi720 found in the definition of control: management's systematic effo
rt to achieve
0 \fi720 objectives by comparing performance to plans and taking appropriate act
ion to
0 \fi720 correct important differences. The definition shows that the specific r
esults of
0 \fi720 planning are an essential input to the control phenomenon; there cannot
be any
0 \fi720 such thing as a control effort without reference to some set of plans.
0 \fi1080 A second example of the inseparability of planning and control results
from
0 \fi720 the fact that they are simultaneous. In practice, the implementation of
the first
0 \fi720 steps of a plan, and any control action needed in those steps, are begu
n before
0 \fi720 all parts of planning are complete. Early results and the early finding
s of control

0 \fi720 activity can then be used in finalizing later parts of the same plan. A
n example
0 \fi720 is that a single annual budget is usually not completely fina
lized before cus\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-280 \b \f10 \fs21 \cf
0 \fi720 tomer orders begin to be received for that year, and consideration of t
he number
0 \fi720 of these actual customer orders may point to trends that need to be con
sidered
0 \fi720 in finalizing the budget. Even actual financial results of the
early weeks and
0 \fi720 months of the year can provide a basis for better establishing the budg
et for the
0 \fi720 later portion of the year.
0 \fi1080 The most elegant example of the inseparability of planning an
d control
0 \fi720 results from the fact that both planning and control are complex human
activi\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-280 \b \f10 \fs21 \cf
0 \fi720 ties, and almost all complex human activities are planned activ
ities and also
0 \fi720 controlled activities. In other words, planning can be so complex that
the plan\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-280 \b \f10 \fs21 \cf
0 \fi720 ning effort is itself controlled (and planned), and control can be so c
omplex that
0 \fi720 control activities are themselves planned (and controlled). Two illustr
ations of
0 \fi720 this are provided as follows:
0 \fi720 (1) A case in which planning is itself planned and controlled is when
a compli\par}{\phpg\posx1679\pvpg\posy1799\absw10130\absh11252 \sl-280 \b \f10 \fs21 \cf
0 \fi1200 cated budget (plan) is to be prepared.To facilitate the creation of th
e budget,
0 \fi1200 a detailed weekly schedule (another plan) is first agreed upo
n, showing
0 \fi1200 which steps in the preparation of the budget are to be carried out dur
ing
0 \fi1200 each week. Because it is desired that the creation of the b
udget not be
0 \fi1200 allowed to fall far behind schedule, the responsible manager will exer
cise
0 \fi1200 control by making comparisons between (a) the actual progress made on

0 \fi1200 the budget each week and (b) the schedule.The manager will also take s
ome
0 \fi1200 corrective action if the difference between the schedule and
the actual
0 \fi1200 progress is considered important.
0 \fi720 (2) A case in which control is itself planned is when a manager decid
es what
0 \fi1200 kinds of control reports will be used to compare actual results with p
lans in
0 \fi1200 each future period of business operations. That decision, any efforts
made
0 \fi1200 to acquire a supply of preprinted report forms to be filled in each pe
riod, and
0 \fi1200 any changes in the design of the cost accounting system to capture and
0 \fi1200 compile the needed information about actual results represent evidence
that
0 \fi1200 the future control activity is being planned. \par
}
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s18 \cf0 1-4 \par
}
cf0 Chapter 1 \par
}
cf0 E1-2
\par}{\phpg\posx720\pvpg\posy1799\absw588\absh1927 \sl-260 \par\b \f10 \fs21 \cf
0 (1)
\par}{\phpg\posx720\pvpg\posy1799\absw588\absh1927 \sl-280 \b \f10 \fs21 \cf0 (2
)
)
)
)
) \par
}
\cf0 B
\par}{\phpg\posx1440\pvpg\posy2319\absw9302\absh2215 \sl-280 \b \f10 \fs21 \cf0
A
C
A
C
B{\f63 \u8212\'3f}although the time frame involved in this kind of plan may be e
xtremely long,
there is nothing strategic about this kind of plan or decision. In fact, the pla
n and
obligation to pay off the bonds when they come due is so routine that manage\par}{\phpg\posx1440\pvpg\posy2319\absw9302\absh2215 \sl-280 \b \f10 \fs21 \cf0
ment would not consciously approach it as a decision. \par
}
{\phpg\posx720\pvpg\posy5080\absw588\absh667 \b \f10 \fs21 \cf0 \b \f10 \fs21 \c
f0 E1-3
\par}{\phpg\posx720\pvpg\posy5080\absw588\absh667 \sl-260 \par\b \f10 \fs21 \cf0
(1) \par
}
f0 (2) \par
}
\cf0 Paragraph (b) comes closest to describing the kind of control used in mana
ging
a business, although it is described in a nonbusiness setting.There is a plan fo

r\par}{\phpg\posx1440\pvpg\posy5600\absw9432\absh5743 \sl-280 \b \f10 \fs21 \cf0
mulated in advance, there is a measure of actual results, there is a
decision
maker who compares actual results with plans, there is a selection of a correc\par}{\phpg\posx1440\pvpg\posy5600\absw9432\absh5743 \sl-280 \b \f10 \fs21 \cf0
tive action to bring results closer in line with the plan, and there is a foresh
ad\par}{\phpg\posx1440\pvpg\posy5600\absw9432\absh5743 \sl-280 \b \f10 \fs21 \cf0
owing of repeated periodic control activities (the remaining quizzes).
\fi360 The fact that the measures of planning and actual performance are nonfina
n\par}{\phpg\posx1440\pvpg\posy5600\absw9432\absh5743 \sl-280 \b \f10 \fs21 \cf0
cial measures is not the governing consideration. Much planned and act
ual
information used in controlling a business is non-financial, including some cost
accounting information such as the number of units produced, the percentage of
units that were defective, and the percentage of available machine time that was
utilized.
Paragraph (a) is a perfect example of an engineering control, rather than the ki
nd
of control managers use in business. The simple device described, which
is
found in any home bathroom, is the kind of control device designed to monitor
a physical condition, and so it is analogous to a thermostat or any of a variety
of
devices called "industrial controls." Of course, devices of this kind are used i
n
manufacturing and other businesses, but they do not possess the essent
ial
attributes of control in the sense used in business and in cost accounting. The
device achieves a continuous monitoring of the results, rather than a periodic
comparison of results with plans.There is no human decision maker who selects
a corrective action to be taken. A human decision maker is probably the salient
attribute of control in managing a business that is missing in paragraph (a). \p
ar
}

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01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
}
cf0 1-5 \par
}
1 \cf0 E1-3 (Concluded)
\cf0 \fi1080 Paragraph (c) could be interpreted as an example of planning, but i
t lacks
\fi720 some essential ingredients of control (even though the word "control" is
used in
\fi720 its last sentence). There is no periodic comparison of actual results wi
th plans
\fi720 and no provision for modifying the treatment based on periodic
results. For
\fi720 example, the contract requires five treatments each year, even if no wee
ds are
\fi720 visible.The actions taken are entirely preemptive.
\fi1080 Paragraph (d) refers to the concept of control that applies to police w
ork and
\fi720 military science. It consists of being able to physically determine each
event that
\fi720 occurs in some location and being able to prevent certain events from oc
curring.
\fi720 The potential use of coercive force, which is very clear in p
aragraph (d), is
\fi720 always present in achieving this kind of control. In paragraph (d), ther
e is no indi\par}{\phpg\posx1680\pvpg\posy1799\absw10191\absh3691 \sl-280 \b \f10 \fs21 \cf0
\fi720 cation that results were periodically compared with plans. A ru
le that says
\fi720 "Obtain the objective at any cost" is sometimes associated with these ac
tivities. \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
s18 \cf0 1-6 \par
}
cf0 Chapter 1 \par
}
cf0 CASES \par
}
f0 C1-1
(1) \par
}
f0 (2) \par
}
cf0 (3) \par
}
\cf0 Yes, Williams has an ethical responsibility to take action.
\fi360 The IMA's{\fs22 Standards}{\fs22 of}{\fs22 Ethical}{\fs22 Conduct} st
ates that management accountants
"shall not commit acts contrary to these standards nor shall they condone the
commission of such acts by others within their organizations."
(The requirement does not ask which standards have been violated, but, rather,
which ones apply to Williams' situation.)
\fi360 Management accountants have a responsibility to:
\fi360 {\ul C}{\ul o}{\ul m}{\ul p}{\ul e}{\ul t}{\ul e}{\ul n}{\ul c}{\ul e}{\u
l :} Perform their professional duties in accordance with relevant
laws, regulations, and technical standards. (Dumping toxic wastes in a residen\par}{\phpg\posx1439\pvpg\posy3079\absw9523\absh9271 \sl-280 \b \f10 \fs21 \cf0
tial landfill is generally a violation of law.)
\fi360 {\ul C}{\ul o}{\ul n}{\ul f}{\ul i}{\ul d}{\ul e}{\ul n}{\ul t}{\ul i}{\u
l a}{\ul l}{\ul i}{\ul t}{\ul y}{\ul :} Refrain from disclosing confidential inf
ormation acquired in
the course of their work except when authorized, unless legally obligated to do
so (Williams may be legally obligated to take action and make certain disclo\par}{\phpg\posx1439\pvpg\posy3079\absw9523\absh9271 \sl-280 \b \f10 \fs21 \cf0
sures.)
\fi360 {\ul I}{\ul n}{\ul t}{\ul e}{\ul g}{\ul r}{\ul i}{\ul t}{\ul y}{\ul :} Re
frain from either actively or passively subverting the attainment
of the organization's legitimate and ethical objectives. (Williams' avoidance of
the issue would passively subvert attainment of ethical objectives.)
\fi360 Communicate unfavorable as well as favorable information and professional

judgments or opinions. (Williams is obligated to report his unfavorable findings
to appropriate persons.)
\fi360 Refrain from engaging in or supporting any activity that would discredit
the
profession. (Williams' silence would provide support to the dumping acti
vity
and, thus, could discredit the profession.)
\fi360 {\ul O}{\ul b}{\ul j}{\ul e}{\ul c}{\ul t}{\ul i}{\ul v}{\ul i}{\ul t}{\u
l y}{\ul :} Disclose fully all relevant information that could reasonably be
expected to influence an intended user's understanding of the reports,
com\par}{\phpg\posx1439\pvpg\posy3079\absw9523\absh9271 \sl-280 \b \f10 \fs21 \cf0
ments, and recommendations presented. (Williams should disclose his findings
to the appropriate persons.)
Alternative (a), to seek the advice of his immediate superior, is appropriate.Th
is
is the first step he is required to take, unless the superior is involved.
\fi360 Alternative (b), communication of confidential information to persons out
side
the company, such as the local newspaper, is inappropriate unless there
is a
legal obligation to do so. If required by law, Williams should contact the prope
r
authorities.
\fi360 Alternative (c), contacting a member of the board of directors, would be
inap\par}{\phpg\posx1439\pvpg\posy3079\absw9523\absh9271 \sl-280 \b \f10 \fs21 \cf0
propriate at this time.Williams should report the problem to successively higher
levels within the company and turn to the board of directors only if the problem
is not resolved at lower levels. \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
}
cf0 1-7 \par
}
\cf0 C1-1 (Concluded) \par
}
cf0 (4) \par
}
\cf0 Williams should follow the company's established policies for reso
lving such
issues, if such policies exist. If the issue is not resolved through existing po
li\par}{\phpg\posx2400\pvpg\posy2319\absw9383\absh2971 \sl-280 \b \f10 \fs21 \cf0
cies, he should report the problem to successively higher levels within the com\par}{\phpg\posx2400\pvpg\posy2319\absw9383\absh2971 \sl-280 \b \f10 \fs21 \cf0
pany until it is resolved. (Williams is not required to report this a
ction to his
superior if his superior appears to be involved in the conflict. He is not to di
s\par}{\phpg\posx2400\pvpg\posy2319\absw9383\absh2971 \sl-280 \b \f10 \fs21 \cf0
close the matter to persons outside the organization, unless required by law.)
During these steps, Williams may clarify relevant concepts by confidential dis-

cussion with an objective advisor to obtain an understanding of possib
le
courses of action. If the conflict is not resolved after exhausting a
ll these
courses of action, Williams may have no other recourse than to resign and sub\par}{\phpg\posx2400\pvpg\posy2319\absw9383\absh2971 \sl-280 \b \f10 \fs21 \cf0
mit an informative memorandum to an appropriate representative of the organi\par}{\phpg\posx2400\pvpg\posy2319\absw9383\absh2971 \sl-280 \b \f10 \fs21 \cf0
zation. Consultation with one's personal attorney is also appropriate. \par
}
cf0 C1-2
0 (1) \par
}
\cf0 (The requirement does not ask which standards have been violated, but, rat
her,
which ones apply to the CFO's behavior.)
laws, regulations, and technical standards. (The CFO has asked Deerling
to
account for information in a way that is not in accordance with gene
rally
accepted accounting principles.)
\fi360 Prepare complete and clear reports and recommendations after appropriate
analyses of relevant and reliable information. (The CFO's restrictions on disclo
sure will result in incomplete reports.)
l a}{\ul l}{\ul i}{\ul t}{\ul y}{\ul :} Refrain from using or appearing to use c
onfidential informa\par}{\phpg\posx2399\pvpg\posy6440\absw9477\absh6751 \sl-279 \b \f10 \fs21 \cf0
tion acquired in the course of their work for unethical or illegal advantage, ei
ther
personally or through third parties. (The CFO is attempting to use confidential
information to protect the job security and bonuses of top management.)
\fi360 {\ul I}{\ul n}{\ul t}{\ul e}{\ul g}{\ul r}{\ul i}{\ul t}{\ul y}{\ul :} Av
oid actual or apparent conflicts of interest and advise all appro\par}{\phpg\posx2399\pvpg\posy6440\absw9477\absh6751 \sl-279 \b \f10 \fs21 \cf0
priate parties of any potential conflict. (The CFO has failed to avoid a conflic
t of

interest and has not informed the stockholders of the conflict.)
\fi360 Refuse any gift, favor, or hospitality that would influence or would appe
ar to
influence their actions. (The CFO's bonus appears to be an influence o
n his
actions.)
\fi360 Refrain from either actively or passively subverting the attainme
nt of the
organization's legitimate and ethical objectives. (The CFO has subverted
the
attainment of the organization's legitimate objective, profit for stockholders,
by
pursuing, instead, the job security and bonuses of top management.)
judgments or opinions. (The CFO is attempting to restrict disclosure of informa\par}{\phpg\posx2399\pvpg\posy6440\absw9477\absh6751 \sl-280 \b \f10 \fs21 \cf0
tion about the acquisition.) \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
s18 \cf0 1-8 \par
}
cf0 Chapter 1 \par
}
\cf0 C1-2 (Continued)
\par}{\phpg\posx720\pvpg\posy1799\absw10251\absh2683 \sl-260 \par\b \f10 \fs21 \
cf0 \fi1080 Refrain from engaging in or supporting any activity that would discr
edit the
\fi720 profession. (The CFO's actions could discredit the profession.)
\fi1080 {\ul O}{\ul b}{\ul j}{\ul e}{\ul c}{\ul t}{\ul i}{\ul v}{\ul i}{\ul t}{\
ul y}{\ul :} Communicate information fairly and objectively. (The CFO is
\fi720 attempting to unfairly control the information reported, resulting in a r
eport that is
\fi720 not objective.)
\fi1080 Disclose fully all relevant information that could reasonably be expecte
d to
\fi720 influence an intended user's understanding of the reports, comments, and
rec\par}{\phpg\posx720\pvpg\posy1799\absw10251\absh2683 \sl-280 \b \f10 \fs21 \cf0
\fi720 ommendations presented. (The CFO is attempting to restrict disclosure of
rele\par}{\phpg\posx720\pvpg\posy1799\absw10251\absh2683 \sl-280 \b \f10 \fs21 \cf0
\fi720 vant information.) \par
}
f0 (2) \par
}
her,
which ones apply to Deerling's situation.)
laws, regulations, and technical standards. (Deerling is being asked to violate
generally accepted accounting principles.)

analyses of relevant and reliable information. (Deerling is being asked to prepa
re
an incomplete report.)
l a}{\ul l}{\ul i}{\ul t}{\ul y}{\ul :} Refrain from using or appearing to use c
onfidential informa\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-279 \b \f10 \fs21 \cf0
tion acquired in the course of their work for unethical or illegal advantage eit
her
personally or through third parties. (Deerling must not use the confidential inf
or\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
mation about the possible takeover to his own advantage or to that of the per\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
son(s) mounting the takeover attempt.)
\fi360 {\ul I}{\ul n}{\ul t}{\ul e}{\ul g}{\ul r}{\ul i}{\ul t}{\ul y}{\ul :} Re
fuse any gift, favor, or hospitality that would influence or would
appear to influence their actions. (The last sentence of the case suggests that
Deerling is considered a member of the top management group, so he may be
eligible for a bonus.)
nt of the
organization's legitimate and ethical objectives. (Deerling is being asked to su
b\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
vert the attainment of the organization's legitimate objective, profit f
or stock\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
holders, by pursuing instead the job security and bonuses of top management.)
judgments or opinions. (Deerling is being asked to restrict disclosure of infor\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
mation about the acquisition.)
the
profession. (Deerling is being asked to take actions that could discredit the pr
o\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
fession.)
l y}{\ul :} Communicate information fairly and objectively. (Deerling is
being asked to prepare a report that is not objective.)

\fi360 Disclose fully all relevant information that could reasonably be expected
to
influence an intended user's understanding of the reports, comments, and rec\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
ommendations presented. (Deerling is being asked to restrict disclosure of rele\par}{\phpg\posx1439\pvpg\posy4840\absw9482\absh8515 \sl-280 \b \f10 \fs21 \cf0
vant information.) \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
}
cf0 1-9 \par
}
\cf0 C1-2 (Concluded) \par
}
cf0 (3) \par
}

cf0 (4) \par
}
\cf0 If the company has established policies for dealing with such issues, Deer
ling
should first follow these policies. If such policies do not exist, or
if they are
unsuccessful in resolving the problem, Deerling should present the problem to
the chairman of the board. Deerling's immediate superior is involved, so he need
not be informed of this action. If the matter remains unresolved, Deerling shoul
d
report to the audit committee, the board of directors, and finally the
majority
owners. During these steps, Deerling may clarify relevant concepts by confiden\par}{\phpg\posx2400\pvpg\posy2319\absw9429\absh4483 \sl-280 \b \f10 \fs21 \cf0
tial discussion with an objective advisor to obtain an understanding of possible
courses of action. If the conflict is not resolved after exhausting a
ll these
courses of action, Deerling may have no other recourse than to resign and sub\par}{\phpg\posx2400\pvpg\posy2319\absw9429\absh4483 \sl-280 \b \f10 \fs21 \cf0
mit an informative memorandum to an appropriate representative of the organi\par}{\phpg\posx2400\pvpg\posy2319\absw9429\absh4483 \sl-280 \b \f10 \fs21 \cf0
zation. Consultation with one's personal attorney is also appropriate.
The primary responsibility the company must fulfill before taking defen
sive
actions is its fiduciary responsibility to stockholders. Other responsib
ilities
include the effects that the takeover and defensive actions would have on cred\par}{\phpg\posx2400\pvpg\posy2319\absw9429\absh4483 \sl-280 \b \f10 \fs21 \cf0
itors, bondholders, employees, customers, and the community. The company
also has a responsibility to inform its external auditors and legal c
ounsel to
avoid putting them in a compromising position. \par
}
cf0 C1-3
0 (1) \par
}
her,
which ones apply to Dixon's behavior.)

l :} Maintain an appropriate level of professional competence by
ongoing development of their knowledge and skills. (By systematically rejecting
all minority applicants, Dixon is jeopardizing the level of competence among the
staff.)
\fi360 Perform their professional duties in accordance with relevant laws, regul
ations,
and technical standards. (Equal opportunity in employment is required by law.)
priate parties of any potential conflict. (Dixon's prejudice is in conflict with
the
company's legal obligation to provide equal opportunity employment, and with
the company's need for the most competent staff regardless of race.)
nt of the
organization's legitimate and ethical objectives. (The company's objectiv
e of
equal opportunity employment is being subverted by Dixon's prejudice.) \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
s18 \cf0 1-10 \par
}
cf0 Chapter 1 \par
}
\cf0 C1-3 (Concluded)
\par}{\phpg\posx720\pvpg\posy1799\absw10025\absh1171 \sl-260 \par\b \f10 \fs21 \
cf0 \fi1080 Refrain from engaging in or supporting any activity that would discr
edit the
\fi720 profession. (Such persistent, systematic discrimination in hiring could d
iscredit
\fi720 the profession.) \par
}
f0 (2) \par
}
f0 (3) \par
}
cf0 (4) \par
}
\cf0 (The requirement does not ask which standards have been violated, but rath
er,
which ones apply to Foxworth's situation.) Because management accountants
may not condone the commission of unethical acts by others within their organ\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
izations, all of the responsibilities listed in the solution to requirement (1)
also
apply to Foxworth's situation.
\fi360 In addition, the following apply:
so. (Foxworth's suspicions about Dixon's behavior should not be disclosed inap\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
propriately. See requirement (3)).
l y}{\ul :} Communicate information fairly and objectively. (Foxworth is
obligated to make objective hiring recommendations to Dixon, in spite o
f his
belief that Dixon will be prejudiced in acting on them.)
Alternative (a), discussion with the director of personnel, who is one of Dixon'
s
peers, is inappropriate at this time. If, however, Foxworth believes the directo
r of
personnel is an objective party, Foxworth may discuss the matter with the direc\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
tor, confidentially, to clarify the relevant concepts and to obtain an understan
d\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
ing of possible courses of action.
\fi360 Alternative (b), informal discussion with a group of MAD senior managemen
t
accountants, is inappropriate.
\fi360 Alternative (c), private discussion with the CFO, Dixon's superior, is ap
propri\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
ate. Because Foxworth has already approached his immediate superior, Dixon,
who is involved in the conflict, it is not necessary for Foxworth to inform him
of
this action.
Foxworth should follow the company's established policies for dealing with this
type of conflict, if such policies exist. If policies do not exist, or if they a
re unsuc\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
cessful in resolving the conflict, Foxworth should discuss the issue wi
th the
CFO. If the matter remains unresolved, discussions with successively higher lev\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
els of management, including the audit committee and the board of directors,
should follow. During these steps, Foxworth may discuss the matter confiden\par}{\phpg\posx1439\pvpg\posy3159\absw9594\absh9019 \sl-280 \b \f10 \fs21 \cf0
tially with an objective advisor to clarify the relevant concepts and to obtain
an

understanding of possible courses of action. If the matter remains unresolved
after exhausting all of these steps, Foxworth may have no recourse other than to
resign and submit an informative memorandum to an appropriate representative
of the company. Consultation with one's personal attorney is also appropriate. \
par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
}
cf0 1-11 \par
}
cf0 C1-4
0 (1) \par
}
\cf0 (2) \par

}
1 \cf0 (The requirement does not ask for a list of responsibilities Rodriquez ha
s vio\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
lated, merely which of the fifteen responsibilities apply to his situation.)
\fi360 {\ul C}{\ul o}{\ul m}{\ul p}{\ul e}{\ul t}{\ul e}{\ul n}{\ul c}{\ul e}{\
ul :} Perform their professional duties in accordance with relevant
laws, regulations, and technical standards. (The figures Rodriquez is
being
asked to prepare might amount to fraud in the loan application.)
analyses of relevant and reliable information. (The reliability of the informat
ion is
in doubt, and the fact that certain sales figures are or are not sufficient to
justify
the bank loan are not relevant to preparation of the budget.)
\fi360 Integrity: Refrain from either actively or passively subverting the atta
inment
of the organization's legitimate and ethical objectives. (There is a push to su
b\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
vert legitimate objectives to the immediate need for a bank loan.)
\fi360 Recognize and communicate professional limitations or other const
raints
that would preclude responsible judgment or successful performance of
an
activity. (Rodriquez has not expressed to Czeisla the conflict between his desi
re
to be a team player and his ethical responsibilities.)
\fi360 Communicate unfavorable as well as favorable information and professiona
l
judgments or opinions. (Rodriquez is being asked to report information
that
reflects so favorably on the company that it may not be justifiable.)
the
profession. (Preparing a deliberately misleading budget as part of a loan appli

cation could amount to obtaining money by fraud.)
\fi360 {\ul O}{\ul b}{\ul j}{\ul e}{\ul c}{\ul t}{\ul i}{\ul v}{\ul i}{\ul t}{\
ul y}{\ul :} Communicate information fairly and objectively. (Rodriquez feels
pressured to abandon his objectivity in preparing the budget.)
\fi360 Disclose fully all relevant information that could reasonably be expecte
d to
influence an intended user's understanding of the reports, comments, and rec\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
ommendations presented. (A comparison of the new targeted sales figure with
the actual sales of the corresponding periods of past years would be likely to
influence the bank's understanding of just how large an increase in
sales is
being portrayed.)
Rodriquez could have clearly stated his concerns to Czeisla at each stage of th
e
budget's creation and revision. He could have consulted with the marketing man\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
ager and production manager at every stage, rather than only upon receiving the
initial budget data. He could present the budget, or a summary of it, in a comp
ara\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
tive form to highlight the differences between each quarter's budget and the ac
tual
results of the corresponding quarter of the preceding year, and he could even c
al\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
culate the percentage increase being budgeted and compare it with actual per\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
centage increases that were achieved annually in the past. He could
have
consulted with his staff superior at the headquarters of Northwestern (the par\par}{\phpg\posx2399\pvpg\posy2319\absw9626\absh10531 \sl-280 \b \f10 \fs21 \cf0
ent company){\f63 \u8212\'3f}Czeisla is his line superior, according to the sec
ond sentence of
the case. \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6
s18 \cf0 1-12 \par
}
cf0 Chapter 1 \par
}
cf0 C1-4 (Concluded) \par
}
f0 (3) \par
}
\cf0 In addition to his ethical responsibilities to CD, Rodriquez has ethical re
sponsi\par}{\phpg\posx1440\pvpg\posy2319\absw9283\absh955 \sl-280 \b \f10 \fs21 \cf0 b
ilities to:
\par}{\phpg\posx1440\pvpg\posy2319\absw9283\absh955 \sl-280 \b \f10 \fs21 \cf0 (
a) The banks
\par}{\phpg\posx1440\pvpg\posy2319\absw9283\absh955 \sl-280 \b \f10 \fs21 \cf0 (
b) The management accounting profession \par
}
f0 C1-5
(1) \par
}
\cf0 (The requirement does not ask for a list of responsibilities Jones has vio
lated,
merely which of the fifteen responsibilities apply to his situation.)
so. (If Jones accepts the consulting engagement with Crimson, it is likely she
will be asked to disclose confidential SMI information about the desired com\par}{\phpg\posx1439\pvpg\posy4199\absw9539\absh8011 \sl-280 \b \f10 \fs21 \cf0
puter system.)
\fi360 Refrain from using or appearing to use confidential information acquired
in
the course of their work for unethical or illegal advantage either personally or
through third parties. (The size of the consulting fee suggests Crimson is seek\par}{\phpg\posx1439\pvpg\posy4199\absw9539\absh8011 \sl-280 \b \f10 \fs21 \cf0
ing to buy confidential information to help win the job.)
priate parties of any potential conflict (The consulting job would constitute an
apparent conflict of interest, and probably an actual one, because Jones
has
been named to the SMI committee that will evaluate and rank all the proposals,
including Crimson's proposal, which she would have helped to write.)
\fi360 Refrain from engaging in any activity that would prejudice their
ability to
carry out their duties ethically. (The consulting job with Crimson would prejudi
ce
Jones' ability to evaluate and rank the proposals for SMI, because one of the pr
o\par}{\phpg\posx1439\pvpg\posy4199\absw9539\absh8011 \sl-280 \b \f10 \fs21 \cf0
posals would be Jones' own work.)
\fi360 Refuse any gift, favor, or hospitality that would influence or would appe
ar to
influence their actions. (Regardless of whether the size of the consulting fee i
s
construed as being a gift or favor, it is likely that other gifts, favors, or ho
spital\par}{\phpg\posx1439\pvpg\posy4199\absw9539\absh8011 \sl-280 \b \f10 \fs21 \cf0

ity will be extended to Jones by Crimson during the course of the consulting
engagement.)
nt of the
organization's legitimate and ethical objectives. (SMI's legitimate objec
tive of
obtaining the best computer system at the best price would be subvert
ed to
Jones' personal need for money, as a result of Jones' disclosing crucial informa
tion for Crimson to include in its proposal, especially if Crimson mi
ght not
deliver a system with the crucial attributes.) \par
}
ffd8ffe000104a46494600010100000100010000ffdb004300010101010101010101010101010101
01010101010101010101010101010101010101010101010101010101010101010101010101010101
010101010101010101ffdb0043010101010101010101010101010101010101010101010101010101
0101010101010101010101010101010101010101010101010101010101010101010101010101ffc0
0011080318026403012200021101031101ffc4001f00000105010101010101000000000000000001
02030405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221
31410613516107227114328191a1082342b1c11552d1f02433627282090a161718191a2526272829
2a3435363738393a434445464748494a535455565758595a636465666768696a737475767778797a
0101010101010101010000000000000102030405060708090a0bffc400b511000201020404030407
05040400010277000102031104052131061241510761711322328108144291a1b1c109233352f015
6272d10a162434e125f11718191a262728292a35363738393a434445464748494a53545556575859
5a636465666768696a737475767778797a82838485868788898a92939495969798999aa2a3a4a5a6

}
cf0 1-13 \par
}
1 \cf0 C1-5 (Concluded)
\cf0 \fi1080 Recognize and communicate professional limitations or other
constraints
\fi720 that would preclude responsible judgment or successful performanc
e of an
\fi720 activity. (Accepting the consulting job would preclude responsible judgm
ent in
\fi720 evaluating and ranking the proposals for SMI; on the other hand, ethical
limita\par}{\phpg\posx1680\pvpg\posy1799\absw10188\absh4951 \sl-280 \b \f10 \fs21 \cf0
\fi720 tions of Jones' employment at SMI would preclude successful performance
of
\fi720 the consulting engagement for Crimson, especially if Crimson does expect
her
\fi720 to reveal crucial information to help win the job{\f63 \u8212\'3f}her et
hical duty to SMI would
\fi720 prevent her from delivering what Crimson is paying for.)
\fi1080 Refrain from engaging in or supporting any activity that would discredi
t the
\fi720 profession. (Selling confidential SMI information to a vendor would be a
discred\par}{\phpg\posx1680\pvpg\posy1799\absw10188\absh4951 \sl-280 \b \f10 \fs21 \cf0
\fi720 itable act.)
\fi1080 {\ul O}{\ul b}{\ul j}{\ul e}{\ul c}{\ul t}{\ul i}{\ul v}{\ul i}{\ul t}{
\ul y}{\ul :} Communicate information fairly and objectively. (Jones would be
\fi720 unlikely to communicate objective evaluations of proposals if she had he
lped
\fi720 write one of them.)
\fi1080 Disclose fully all relevant information that could reasonably be expect
ed to
\fi720 influence an intended user's understanding of the reports, comments, and
rec\par}{\phpg\posx1680\pvpg\posy1799\absw10188\absh4951 \sl-280 \b \f10 \fs21 \cf0
\fi720 ommendations presented. (Jones' role in writing the Crimson proposal wou
ld be
\fi720 relevant information in SMI's use of her evaluations of proposals.) \par
}
cf0 (2)
0 (3) \par
}
\cf0 (4) \par
}
\cf0 Jones might have disclosed, either orally or on her personal vita sheet or
job appli\par}{\phpg\posx2400\pvpg\posy7360\absw9452\absh4483 \sl-280 \b \f10 \fs21 \cf0
cation, the extent of her involvement on the SMI task force and the committee.
Jones could have first investigated all her career opportunities with firms that
presented no potential conflict of interest of this kind, but for the sake of th
e
argument, it is reasonable to assume she did exactly that before applying for a
position at Crimson. Knowing that Crimson is a supplier of computer systems,
Jones might have revised her personal vita sheet and the wording of her appli\par}{\phpg\posx2400\pvpg\posy7360\absw9452\absh4483 \sl-280 \b \f10 \fs21 \cf0
cation for this one job interview to lessen the chances of Crimson's
being
tempted to pursue an unethical plan. (Of course, her involvement in S
MI's
upcoming purchase might have become known to Crimson anyway, or it might
have been known to Crimson from other sources before her interview or even
before her application for the position.)
In addition to her ethical responsibilities to SMI (and her financial responsibi
lity
to the hospital that provides treatment for her child), Jones has ethical respon
sibilities to:
(a) her family
(b) the management accounting profession
(c) Crimson \par
}
}

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620 tional objectives are achieved.

\f10 \fs18 \cf0 \fi

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a business, although it is described in a nonbusiness setting.There is a plan fo

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\cf0 (2) \par

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