Ethical Guidelines for Management Accountants: Conflicts and Resolution

Machine Translated by Google 1. Avoid actual or apparent conflicts of interest and alert all parties to potential conflict. 2. Refrain from being involved in various activities that will raise suspicion against their ability to perform their duties ethically. 3. Refusing gifts, awards, and hospitality that can influence them deeply on duty 4. Refrain from undermining the legitimacy of the organization and its goals ethics, either passively or actively. 5. Recognize and communicate various professional boundaries or other constraints that will hinder the emergence of responsible judgment or successful performance of an activity. 6. Communicate good or bad information and professional judgment or opinion. 7. Refrain from engaging in activities that are detrimental to the profession. Objectivity _ The management accountant is responsible for: 1. Communicating information fairly and objectively. 2. Disclose all relevant information that can be expected to influence understanding users of reports, comments, and recommendations issued. Ethical Conflict Resolution Management accountants may face problems identifying behaviors that are not ethical behavior, or in resolving ethical conflicts. When faced with important ethical issues, accountants Management must follow the policies set by the organization in dealing with conflicts. If If this policy does not resolve ethical conflicts, the management accountant should consider action the following: 1. Discuss the matter with the supervisor unless the matter involves the boss. In this case, the problem should be reported immediately to a higher level next. If a final satisfactory resolution cannot be reached by the time the problem is disclosed, escalate the matter to a higher level of management. 2. If the immediate supervisor is the chief executive officer (CEO), or equivalent, the authority to addressing the problem may be in the hands of a group such as the audit committee, executive committee, 7 Machine Translated by Google board of directors, trusteeship board, or owners. Relating to a level above the immediate superior should be done with the knowledge of superiors. 3. Explain relevant concepts through confidential discussions with an advisor objective to achieve an understanding of possible actions. 4. If the ethical conflict still exists after reviewing all levels, the management accountant may have no other recourse but to resign from the organization and provide the memo informative to the designated representative of the organization. 5. unless otherwise legally ordered, communicating the matter to various authorities or individuals who have no relationship with the organization is not an appropriate consideration. Exercise Questions 1. Explain the meaning of organization and management functions in the organization. 2. The management accountant is actively involved in the process of managing the entity. This process includes making strategic, tactical, and operational decisions that simultaneously help coordinating the efforts of the entire organization. To fulfill all these purposes, management accountants accept certain responsibilities which can be identified as: (planning), (2) controlling , (3) performance evaluation, (4) resource accountability assurance, and (5) external reporting. Required: Describe the responsibilities of the above management accountants and identify examples of practice and technique. 3. Case Managerial Process Each of the following scenarios requires the use of accounting information to execute incorrectly one or more of the following managerial activities: planning, controlling (including evaluation performance), or decision making. Identify managerial activities or activities that can applied to each scenario and indicate the role of accounting information in the activity the. A. Manager: “A supplier approached me recently and offered a vacuum pipe at $20 per unit. We are currently producing our own pipes. I need to know what costs can be avoided if we buy the vacuum pipe.” B. Manager: “This report indicates that we have spent 20 percent more materials than originally planned. An investigation to find the cause has reveal the problem. We have been using quality materials lower than it should be and produce higher than normal waste. 8 Machine Translated by Google By returning to the original level of quality, we can cut excess costs up to 10%.” C. Manager: “Our salespeople indicated that they expect to sell 15 percent units higher than last year. I want to know the resulting profit projections by this increase in sales. I also want to know the cash receipts and disbursements expected on a monthly basis. I feel that a short term loan is possible needed.” D. Manager: ”Seeing the intense competition, we need to do something to improve efficiency of our production process. Right now, we are considering implementation two different automated manufacturing process systems. I need to know cash flow in future which will come in relation to the use of each system." E. Manager: “At the last board meeting, we have set a revenue goal return on sales of 25%. I need to know how many units of product should be we sell to achieve this goal. As soon as I have those sales estimates, we need to draw up an outline of a promotional campaign that can lead to our goals want. However, in order to calculate the targeted sales units, I need knowing the expected unit price and cost information is overwhelming.” F. Manager: “Perhaps Harrison Medical Clinic should not offer all the services medical services. Some services are unlikely to turn a profit. I am especially concerned with mental health services. There are no mental health services at all making a profit since the clinic opened. I need to know what the costs can be avoided if I stop the service. I also want some estimates of the impact that could occur to some of the other services we provide offer. Some of our patients may choose this clinic because we offer all services medical service." 4. Describe management's need for management accounting information. 5. Explain the difference between management accounting and financial accounting. 6. Describe the ethical behavior of management accountants. 9