You Are the New Managerial Accountant for a Company That

question 53

Essay

You are the new managerial accountant for a company that awards its managers with a year-end bonus based on exceeding the target operating profit presented in the yearly budget proposal.The controller tells you that she believes the company will likely have operating profit of $120 million in 2012,but asks you to prepare a proposal with projected operating profit of $100 million.She notes that "after all,it is only an estimate,and it would be a shame if the managers missed their bonus again this year after all their hard work." You realize that the only way to project operating profit of $100 million is to make unrealistically low sales estimates and unrealistically high cost estimates.
Using the IMA's Statement of Ethical Professional Practice,what guidelines are violated and how should you handle this situation?

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Definitions:

Hypnotism

The practice of inducing a trance-like state in which a person is more susceptible to suggestion.

Psychoanalytic Treatment

A therapeutic process rooted in Freudian theory that seeks to explore and understand unconscious thoughts and behaviors through techniques like dream analysis and free association.

Profound Behavioral Changes

Significant alterations in an individual's actions, attitudes, or emotions, which can be due to various factors, including health conditions, environment, or psychological issues.

Severely Disturbed

Refers to individuals exhibiting extreme emotional, behavioural, or mental disorders, substantially impacting daily functioning.