Chambers Development Cods founder, John G. Rangos Sr., demanded results no matter where they came from. "Go find the rest of it," he told an executive in 1990 after the executive said profit would fall short of projections.

The charade collapsed [on June 20, 1991] when an outside audit disclosed that in every year since Chambers went public in 1985, the company reported strong profits but actually lost money. Now, a chastened Chambers, once hailed on Wall Street as a waste-management star, has restated net income for each of the past seven years to reduce its reported profits by $362 million on an after-tax basis.

Mr. Rangos and his two sons hold a sizable equity stake in the company. Former and current managers describe Mr. Rangos as a man obsessed with making his garbage company a star and insistent on managers meeting his lofty profit goals.

a. Discuss whether it is more likely that Chambers Development used an im¬ posed or participatory budgeting process. Explain the rationale for your answer.

b. How might it have been possible for managers to “find” additional profits? Why would such “found profits” not have been discovered by the auditors?

c. Why would the managers be willing to “find” the additional profits?

d. At some point should the ethics of the managers have outweighed the notion of budget performance responsibility? Why?LO1