Overview

We have just begun to see the benefits of budgets, but there is also the risk that an error in a budget could lead to a different business decision or hurt the company. This discussion will allow you to develop expertise in evaluating the ethical dilemmas that can occur when preparing and analyzing budgets.

Instructions

You are an accountant working in the Budget Department for Phillips Brothers Printers (PBP). The President is planning a trip back east to visit several large brokerage firms and wants to present a two-year financial budget projection for PBP, with the intent being to encourage favorable investment ratings for the company, which will increase trading and the stock price.

You work day and night over the next two days to prepare the projection reports and deliver them to the President, who leaves for his trip the next morning. Later that week, you are reviewing your calculations for the projection reports and discover a significant error that inflated the projections. You check with the President's administrator and he informs you the President has already made his presentation at two of the five brokerage firms.

Answer the following questions:

1. What are the implications if you don't tell the President of your error immediately?
2. What are the implications if you do tell the President of your error immediately?
3. Who are the stakeholders in this situation?
4. What are the ethical considerations, for both you and the President, in this situation?