Discussion 9: Ethics in Accounting

Go to page 810 of your text and read Ethical Issue 16-1. After reading, discuss in detail the following:

1. Discuss the ethical issue in detail.

2. Discuss options you will consider to reach an ethical decision.

3. Discuss the options you will choose.

4. Discuss the possible consequences of your decision.

5. Discuss whether the " IMA Statement of ethical professional practice" will help you make an ethical decison.

Ethical Issue 16-1 on page 810:

Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car dealer in Upper Saddle River, New Jersey. Becky has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough to satisfy demand. The manufacturer's regional sales managers are each given a certain number of cars. Each sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to receive as many cars as they can from the regional sales manager. Becky's former employer, Shamalay Automotive, receives only about 25 cars a month. Consequently, Shamalay was not very profitable.

Becky is surprised to learn that her new employer, Mueller Imports, receives over 200 cars a month. Becky soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for miscellaneous services." Franz Mueller, the owner of the dealership, personally approves payment of these invoices, noting that each invoice is a "selling expese." From casual conversations with a salesperson, Becky learns that Mueller frequently gives Rolex watches to the manufacturer's regional sales manager and other sales executives. Before talking to anyone about this, Becky decides to work through her ethical dilemma.

Requirement

1. Put yourself in Becky's place.

a. What is the ethical issue?

b. What are your options?

c. What are the possible consequences?

d. What should you do?