Adam Williams was recently hired as assistant controller of GroChem, Inc., which processes chemicals for use in fertilizers. Williams was selected for this position because of his past experience in chemical processing. During his first month on the job, Williams made a point of getting to know the people responsible for the plant operations and learning how things are done at GroChem. During a conversation with the plant supervisor, Williams asked about the company procedures for handling toxic waste materials. The plant supervisor replied that he was not involved with the disposal of wastes and suggested that Williams might be wise to ignore this issue. This response strengthened Williams’ determination to probe this area further to be sure that the company was not vulnerable to litigation. Upon further investigation, Williams discovered evidence that GroChem was using a nearby residential landfill to dump toxic wastes—an illegal activity. It appeared that some members of GroChem’s management team were aware of this situation and may have been involved in arranging for this dumping; however, Williams was unable to determine whether his superior, the controller, was involved. Uncertain how he should proceed, Williams began to consider his options by outlining the following three alternative courses of action:

• Seek the advice of his superior, the controller.

• Anonymously release the information to the local newspaper.

• Discuss the situation with an outside member of the board of directors with whom he is acquainted.

Required:

1. Discuss why Adam Williams has an ethical responsibility to take some action in the matter of GroChem, Inc., and the dumping of toxic wastes. Refer to the specific standards (competence, confidentiality, integrity, and/or credibility) in the Statement of Ethical Professional Practice established by the Institute of Management Accountants to support your answer.

2. For each of the three alternative courses of action that Adam Williams has outlined, explain whether or not the action is appropriate according to the Statement of Ethical Professional Practice established by the Institute of Management Accountants.

3. Assume that Adam Williams sought the advice of his superior, the controller, and discovered that the controller was involved in the dumping of toxic wastes. Describe the steps that Williams should take to resolve this situation.

(CMA, adapted)