Suppose a Management Accountant Becomes Aware of a Confidential but Illegal

question 112

Essay

Suppose a management accountant becomes aware of a confidential but illegal act that has occurred within her company.The management accountant must consider what she is ethically bound to do about this situation.Three alternative responses to this situation are given below.State whether you agree or disagree with each,and briefly detail your reasons.
a.The accountant must remain loyal to the company at all times and should report the occurrence only to appropriate officials within the company.
b.The accountant is bound to inform officials only if she stands to personally gain (make money)from knowledge of the illegal act.
c.The accountant must exercise personal judgment;a clear-cut answer does not exist given the limited information provided.

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Definitions:

Formalization

The degree to which an organization formally documents its policies, procedures, job roles, and regulations in writing.

Decentralization

The distribution of decision-making powers and operational responsibilities away from a central authority to individual units or levels within an organization or system.

External Environment

All external forces or factors that impact an organization's performance, including competition, economy, laws, and social trends.

Diverse Environments

Contexts or settings characterized by a wide range of differences, including cultural, biological, social, and ecological variation.