Sheila is a financial manager who has discovered that her company is violating environmental regulations. If her immediate superior is involved, her appropriate action is to
Answer (C) is correct. To resolve an ethical problem, the financial manager/management accountant’s first step is usually to consult his or her immediate superior. If that individual is involved, the matter should be taken to the next higher level of management.
IMA members are obligated to maintain the highest standards of ethical conduct. Accordingly, IMA’s Statement of Ethical Professional Practice explicitly requires that IMA members
Answer (B) is correct. The principles section of IMA’s Statement of Ethical Professional Practice, “IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. Members shall act in accordance with these principles and shall encourage others within their organizations to adhere to them.”
Integrity is an ethical requirement for all IMA members. One aspect of integrity requires
Answer (B) is correct. According to IMA’s Statement of Ethical Professional Practice, IMA members must “mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts.”
Under the express terms of IMA’s Statement of Ethical Professional Practice, an IMA member may not
Answer (C) is correct. IMA members may not disclose confidential information acquired in the course of their work unless authorized or legally required to do so. They must also “inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates’ activities to ensure compliance.”
An IMA member discovers a problem that could mislead users of the firm’s financial data and has informed his or her immediate superior. (S)he should report the circumstances to the audit committee and/or the board of directors only if
Answer (D) is correct. According to IMA’s Statement of Ethical Professional Practice, an IMA member should “discuss the issue with your immediate supervisor except when it appears that the supervisor is involved. In that case, present the issue to the next level. If you cannot achieve a satisfactory resolution, submit the issue to the next management level. If your immediate supervisor is the chief executive office or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive committee, board of directors, board of trustees, or owners.”
Recently, Fan Club, Inc., submitted to management a budget for the coming year. Included in the budget were the plans for a new product, a rechargeable fan. The new fan will not only last longer than the competitor’s product but is also more quiet. While not yet approved, the budget called for aggressive advertising to support its sales targets, as the business community was not yet aware that Fan Club was close to production of a new fan. A member of the management
accounting staff “shared” the budget with a distributor. In accordance with IMA’s Statement of Ethical Professional Practice, which one of the following would best represent an ethical conflict in this situation?
Answer (D) is correct. IMA’s Statement of Ethical Professional Practice states that every member has a responsibility to keep information confidential except when disclosure is authorized or legally required.
A new management accountant is concerned about complying with the ethical standard of competence in the IMA’s Statement of Ethical Professional Practice. Which one of the following is not required under the standard of competence?
Answer (A) is correct. Maintaining expertise in all areas of accounting would be a difficult task. According to the ethical standard of competence in the IMA’s Statement of Ethical Professional Practice, a CMA only needs to recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.
Scott Jon, a new accounting clerk at a firm that had recently terminated several employees due to budgetary cutbacks, accidentally viewed his supervisor’s biweekly paycheck. Not realizing that the paycheck included an annual bonus, Jon erroneously multiplied the gross pay by 26 to find annual earnings. Jon was amazed that his supervisor appeared to earn more than twice the local average for employees in an accounting supervisory position. Jon discussed this situation with a friend, a recently terminated employee of the company who now worked for a local newspaper. As a result of this discussion, the supervisor’s “outrageous” salary was made public. Which one of the standards of the IMA’s Statement of Ethical Professional Practice did Jon’s actions violate?
Answer (B) is correct. The standard of confidentiality states each member has a responsibility to (1) keep information confidential except when disclosure is authorized or legally required, (2) inform all relevant parties regarding appropriate use of confidential information and monitor subordinates’ activities to ensure compliance, and (3) refrain from using confidential information for unethical or illegal advantage.
Chris Benedict was recently tried and convicted in court for producing and selling illegal narcotic drugs. None of the activity occurred during work hours, and Benedict performed duties as a management accountant without incident during the period of illegal activity. Benedict has argued that because the illegal activity was unrelated to Benedict’s service as a management accountant, no ethical violation had been committed. Which provision of the IMA’s Statement of Ethical Professional Practice is most likely to apply to Benedict’s illegal actions?
Answer (C) is correct. The integrity standard states that each member has a responsibility to abstain from engaging in or supporting any activity that might discredit the profession. Being convicted of producing and selling illegal narcotic drugs is an activity that would discredit the profession.
At NC Corporation, year-end bonuses at each branch office are based on branch profitability. Due to a slow economy, profitability through the third quarter at the Northeast branch is under budget. To address this issue, the accounting staff at the Northeast branch develops a list of end-of-year actions designed to boost earnings for the year. Which one of the following is most likely to violate IMA’s Statement of Ethical Professional Practice?
Answer (A) is correct. IMA’s Statement of Ethical Professional Practice states that its members have responsibilities in the areas of competence, confidentiality, integrity, and credibility. Requesting the branch’s advertising agency to delay billing third quarter advertisements until January will most likely violate IMA’s Statement of Ethical
Professional Practice in the areas of integrity and credibility. Integrity is impaired because an IMA member should abstain from engaging in or supporting any activity that might discredit the profession, and credibility is impaired because an IMA member should disclose all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendations.