Consider the following scenario:

MANAGER: "If I can increase my fourth quarter profit by $120,000, my division will show a profit 10 percent above the planned level, and I will receive a $30,000 bonus. However, my controller indicates that such an increase is unlikely. With only one month remaining, the projections for the fourth quarter show an income that increases by only $20,000. I re¬

ally need that $30,000 bonus. I know one way I can qualify. All I have to do is delay planned promotions for the fourth quarter. I'll simply tell employees that budgetary demands have forced me to delay the promotions until the first of the year. That should save at least

$100,000 in my salary budget and allow us to meet the targeted income and achieve my bonus."

Required:

What is the right choice for the manager to make? Why did the ethical dilemma arise? Is there airy way to redesign the accounting reporting system to discourage the type of be¬

havior the manager is contemplating?