Its no fun accepting a position for your dream job and then red flags are raised that make you wonder about the culture of the company. Those are the thoughts of Donna Mason on January 18, 2016, as she prepares for a meeting with her accounting supervisor, Cheryl Miles. Mason graduated summa-cum-laude from State University six months ago. She is working as a staff accountant at Harrison Industries in Provo, Utah. Mason is one of three staff accountants. She reports to Cheryl Miles, who, in turn, reports to Kelly Lang, the chief accounting officer. Lang reports to the CEO, Ken Harrison, and the third generation of owner-CEOs of the privately held company. Harrison is also the chair of the board of directors, which has five of nine independent members

Masons concern is that on January 15, 2016, she was approached by Miles and told to record an accrual for unpaid severance payments of $5 million to be included in the December 31, 2015, financial statements. Mason expressed her concern at the time because it was an unusually high amount. Miles informed Mason that the company planned to shut down the home appliance division in 2016 and the severance payments would be significant. This was the first Mason heard about a shutdown of any division, and she found it strange because the companys operating income in all divisions had set record levels in the fiscal year 2015. Moreover, the severance amounts are five times the annual payroll of the division.

The numbers below show the operating income levels and accruals for 2013 through 2015:

	12/31/2013	12/31/2014	12/31/2015
Operating Income	$10 million	$12 million	$20 million (pre-adjusting entries)
Accrued bonus and severance	$1 million	$1.2 million	???

Mason took a firm stance at first and told Miles she needed some documentation to record the accrued severance liability. Miles instructed Mason to record the entry, that it wasnt her job to question orders. Miles made it clear in no uncertain terms that questioning directions from ones supervisor was a basis for termination. This occurred on January 15, 2016.

Mason knew she had three days before the next meeting with Miles to consider her options. The first step she took was to contact her mentor, Steve Hahn, who explained the culture of the company is to go along to get along. Hahn quickly added that it was a rare occurrence for an employee to be asked to go along with something not right, so he advised Mason to do what Miles had asked. He seemed to be saying that if Miles asked her to record the severance payments, then it must be supportable.

Mason did a lot of independent checking of the companys computer files between January 15 and January 18, 2016, and found no evidence of a planned shutdown of the division. In fact, the divisions income had risen on average by 5 percent a year for three straight years. The income level for 2015 was the highest8 percent. It exceeded projections by 3 percent.

Mason is trying to build a strategy to convince Miles of why the severance accrual is not justified. She realizes that Miles could be under orders from Kelly Lang and/or Ken Harrison. She wonders whether it would be wise to approach them about her concerns. After all, they interviewed Mason for the accounting position and ultimately made the decision to offer her the job. Mason felt good about working for them and Harrison Industries because organizational values and ethics were high, as is Masons.

Requirement:

1. What is Donnas most effective approach to giving voice to her values? Explain.