Evans Company is considering expanding its manufacturing operations. It can either convert a warehouse it currently owns in the suburbs, or it can expand its current manufacturing plant downtown. After the board of directors approved the expansion, George Watson, the controller, set about to determine which proposal had the higher net present value. He assigned this task to Helen Dodge, the assistant controller.

Dodge completed her task and discovered that the warehouse proposal had a negative net present value, while the downtown expansion proposal was slightly positive.

Watson was displeased with Dodge's report on the warehouse proposal. He returned it to her stating that, "You must have made an error. This proposal should look better." Helen Dodge suspected that Watson wanted the warehouse proposal to succeed so that he could avoid his daily commute to the city. Dodge checked her figures and found nothing wrong. She made some slight revisions, however, to her report, changing her estimates from those that were probable to those that were remotely possible.

Watson was quite angry and demanded a second revision. He told her to start with a positive net present value of $100,000 and work backwards to compute supporting estimates and projections. Dodge is quite upset and unsure what she should do!

a. Was Helen Dodge's first revision on the proposal for the warehouse conversion unethical?

b. Was George Watson's conduct unethical when he gave Helen specific instructions on preparing the second revision?

c. How should Helen Dodge attempt to resolve this issue? Should she discuss this issue with those outside of the organization?