Alert, a closely held investment services group, has been very successful over the past three years. Bonuses
Question:
Alert, a closely held investment services group, has been very successful over the past three years. Bonuses for top management have ranged from 50 percent to 100 percent of base salary. Top management, however, only holds 35 percent of the common stock, and recent industry news indicates that a major corporation may try to acquire Alert. Top management fears that they might lose their bonuses, not to mention their employment, if the takeover occurs. Management has told Roger Deerling, Alert's controller, to make a few changes to several accounting policies and practices, thus making Alert a much less attractive acquisition. Roger knows that these "changes" are not in accordance with generally accepted accounting principles.
Roger has also been informed not to mention these changes to anyone outside the top-management group.
a. From the viewpoint of the "Standards of Ethical Conduct for Management Accountants," what are Roger Deerling's responsibilities?
b. What steps should he take to resolve this problem?
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