The case assumes no technical knowledge of management and cost accounting but deals with ethical issues that often face accounting professionals. It engages in a discussion of how far the notion of ‘different costs for different purposes’ might extend.

Our story opens with an irate Jim McIntosh confronting his manager of corporate reporting:

‘I thought we had an understanding on this issue, Frank. Tina tells me that you are threatening to go public with your stupid statements about the report. For Pete’s sake, Frank, wake up and smell the coffee! You’re about to damage all the important things in your life: your career, your friendships and your company!’

Frank sat quietly in the overstuffed sofa in his VP’s expansive office. He thought that the pale green report lying on the desk looked innocent enough, but it certainly had provided the basis for some serious turmoil: Jim stood by his desk trembling with rage. His face was bright red and mottled with anger. Frank had often seen Jim upset, but never in a temper such as this.  ‘I’m sorry, Jim’, Frank replied softly, ‘I know how much this means to you, but I don’t think that I have a choice in this matter. I can’t sit idle while you and that twit from financial analysis allow this report to go forward. You both know that these numbers have no foundation in fact.’ The report, entitled ‘Endangered species: The pulp and paper industry in the Upper Peninsula’, laid out the industry’s response to the new government proposals to put effluent controls on the discharge of waste water from pulp and paper mills in environmentally sensitive regions of the province. One section of the report detailed the financial consequences of the emission controls as determined by each of the five pulp and paper companies operating in the region. Amalgamated Forest Products had taken the industry lead in developing the report and the company president, Jean Letourneau, was scheduled to testify before a legislative sub-committee next week, giving the industry perspective on the proposed legislation. Amalgamated had three major mills, located in some of the more remote locations in the province. The firm had been facing difficult financial times due to the recession and this had caused substantial hardship in the three small communities where the mills were located.

Corporate offices were located in Northlake, a town of approximately 10,000 people. The section of the report dealing with the dollar impact to Amalgamated Forest Products of installing the emission control equipment had been prepared by Tina Pacquette. Tina, a long-term employee of the firm, had risen through the accounting department to become the manager of financial analysis. While Tina and Frank were at equal levels in the organizational structure, their working relationship had not been particularly cordial. In Frank’s opinion, Tina’s work was barely adequate, but then, no one asked for his opinion.

‘Well, Frank, your pig-headedness has really caused a problem for all of us! Wait here! I’ll get Jean Letourneau and we’ll see what he thinks about your efforts.’ Jim left the office and slammed the door. As he waited in the silence of his boss’s beautifully decorated office, Frank looked back over his ten years with Amalgamated Forest Products. Just like his father before him, Frank started with the firm after completing high school and his first job was as a yard man sorting out damaged logs before processing. That’s when Frank severely damaged his right leg on the job.

He had been celebrating the birth of his son the night before and he was unable to manoeuvre his footing with the dexterity required. Surgery saved the leg and he was extremely grateful that the company had brought him inside to the accounting office. An accounting clerk’s salary was low compared with being a yard helper, but in a short time his natural talent for analysis brought him to the attention of the vice-president, Finance. Within two years, Jim McIntosh had arranged for him to go to university, complete his CMA designation after graduation, and then return to Amalgamated. The financial support provided by the firm had been adequate but not lavish by any means, and Frank had done well in his studies. He was the gold medallist for his province on the CMA examinations, and he had returned to Northlake in triumph.

With three young children and a proud wife, Frank had been appointed to a new position in corporate reporting. After a year of having Jim as his mentor, he rose to the position of manager of corporate reporting.......

Question

What would you do if you were Frank?

Transcribed Image Text:

Frank Carbonneau Manager Corporate Reporting Jean Letourneau Company President Jim McIntosh Vice-president, Finance Tina Pacquette Manager Financial Analysis