You Are the New Managerial Accountant for a Company That

question 58

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 for the year,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:

Independent Choices

Decisions made by an individual based on personal judgment and preferences, free from outside influence or pressure.

Parental Attention

The amount of time and quality of interaction that parents give to their children, significantly influencing the child's development.

Collective Unconscious

A concept proposed by Carl Jung, referring to the part of the unconscious mind that is shared among beings of the same species containing memories and archetypal symbols.

Primordial Images

Archetypal images derived from the collective unconscious, as defined by Carl Jung, representing fundamental human experiences and themes.