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Phoonix Press produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a zo% reduction in cperating income ove

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Phoonix Press produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a zo\% reduction in cperating income ove the past 9 months, primarily due to an econcmie recession and a depressed consumer housing marknt. The division's cortroller, Sophie Gellar, has fit pressure from the CFO to itprove her division's operating results by the end of the year. Gellar is considering the following oplions for improving the division's performance by year-end: (1) (Cick the icon to vew the opitions to improve performance) Read the reguirements. Requirement 1. What are the motivatons for Celar to improve the division's yeaf-end operating earnings? Gellar's first moivation could be Phoenik Press may have a divesion bonus plan based on the division's ability to meet certain profit targets. Gollar f operating income is maripulated by Gellar's second motivation could be Top management of Phoenik Press likely will viow those division managers that as being the best prospects for promotion. Requirement 2. From the point of view of the "Standards of Ethical Behavior for Practifonens of Management Accounting and Financial Managemenf; which of the precedrg fems (a-f) are acceptable? Which are unacceptable? (Click the ioon to view the Siandards of Ethical Behavior for Practitioners of Manogement Accounting and Financial Management) Detarmine whether each of the options is in clear volation (Vlolation), is dearty in compliance with (No Violation), or may be in violation with (Potential Violation) the "Sendarts of Ethical Eaherior io Practitoners of Management Accounting and Financial Managersent". Phoenix Press produces consumer magarines. The house and home division, which sells hame-improvement and hame-decorating magazines, tas seen a 20% reduction in eperating income oue division's operating results by the end of the year. Gellar is conaidering the following options for improving the division's performance by year-and: (i) (Click the icon to view the options to improve pertormance.) Read the roquirements. Phoenix Press produces consumer magazines. The house and home division, which sels home-improvement and homs-decorating magazinns, has seen a 20% reduction in operating income orer the past 9 months, primarly due to an economio recession and a depressed consumer housing market. The division's controller, Sophie Gellar, has falt pressue from the CFO to in prowe har. division's operating results by the end of the year. Cellar is considering the following options for improving the division's performance by year-end: i. (Click the icon to view the options to improve perlormance.) Read the reauirements. Options to improve Performance Violation? Delaying the shipment of January issues, normally shipped on December 20, to January 2 , shifting the postage costs to January. Subseription revenue for those issues, however, would be d. recognized in December. Options to improve Performance Violation? e. Recognlaing advertising revenues that relate to January in December. Options to improve Performance Violation? Switehing from declining balance to straight-line depreciation to reduce depreciation expense in f. the current year. Requirement 3. What should Gellar do about the pressure to improve performance? A. Cellar should directly raise her concerns first with the CFO, especialy It the pressure from the CFO is so great that the only course of action on the part of the controlar is to otheniise behave unethicaly. If the CFO refuses to change his direction, then the controller should raise these issues with the CEO, and next to the Audit Comrritiee and the Board of Directoin, ater informing the CFO that she is doing so. The Controller could also initiate a confidental discussion with an iMA Etrics Counselor, other impartal adviser, or Nisher conn attomey 8. Gelar should do whatever the CFO asks her to do in corder to improve her division's operating rewils by the end of the year. She is folowing the CFO's orders and wit therolore be acting ethically. c. Gollar should resign immodiately. Phoenix Press produces consumer magazines. The house and home division, which sells home-improvement and home-decora:ing magazines, hos some a 20% roduction in operating income aver the past 9 months, primarily due to an economic recession and a depressed consumer housing market. The division's controllor, Sophie Cellar, has fat pressure from the CFO to improve her division's operating results by the end of the year, Gellar is considering the following options for improving the division's performance by year - iend: (i) (Click the icon to view the options to improve performance.) Read the reguirements. shifting the postage costs to January. Subscription revenue for those issues, howover, would be d. recopnized in December. Options to lmprove Performance Violation? e. Recogniring advertising revenues that relate to January in December. Options to Improve Performance Violation? Switching from declining balance to straight-line depreciation to reduce depreciation expense in f. the current year. Requirement 3. What should Gellar do abcut the pressure to improve performance? A. Gelar should directy raise her concerns first with the CFO, especially if the pressure fom the CFO is so great that the only oourso of action on the part of the controlier is to otherviso behave unethically. If the CFO refuses to change his direction, then the controler should raise these issues with the CEO, and nexd to the Audit Correnitte and the Board of Drectors, afier informing the CFO that she is doing so. The Controller could also initiate a confidential discussion with an IMA Ethics Counselor, other imparsal adviser, er hisher own atiorney. B. Geliar should do whatever the CFO asks her to do in order to improve her division's cperating result by the end of the year. She is following the CFO's crdens and wit therefore be acting ethically. C. Gellar should resign immediately. D. Gellar should contact legal counsel. If legal counset is unwilling to take legal action against the CFO, then Gellar should resign

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