Please see the attached for the scenario.

1.Using either the Statement of Ethical Professional Practice issued by the Institute of Management Accountants (IMA) or The Code of Ethics for Professional Accountants published by CIMA as your guide, determine whether there is an ethical issue for you in this scenario. Within your answer apply the Codes fundamental principals/standards (i.e. integrity, objectivity, competence and confidentiality) to the case data and explain whether each is a relevant factor when determining Eddies ethical position.

References:

IMA (2014) Statement of Ethical Professional Practice, Montvale: IMA, Available from:

http://www.imanet.org/-/media/021b81bc074f49cc81480473f8a88fce.ashx

[accessed January 10, 2017]

Also see p. 959-960 of the Nobles et al textbook.

CIMA (2013) Code of Ethics for Professional Accountants, London: CIMA, Available from:

http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/2015%20code%20of%20ethics/CIMA_Code_of_Ethics2.pdf [accessed January 10, 2017]

The Codes fundamental principles are outlined on page 4. CIMA also provides an ethical checklist when applying its Code:

http://www.cimaglobal.com/Global/Images/standards-and-ethics/ethics_checklist_web_June2015_update.pdf

2.Assuming that you are Eddie, discuss what you would do to resolve this situation.

Submission requirements:

On your submission, write out the question and then put your answer immediately below the question. This is a business class and I want succinct answers. I am not looking for paper length, but the fewest words to correctly answer the questions. In the business world, you do not write a five page memo if one paragraph is sufficient.

ACC2020 Principles of Accounting II Spring 2017 The Ethical Dilemma at Pongy Plastic Limited (40 points: your memorandum must be submitted on or before April 13, 2017 Pong Plastic Ltd operates three manufacturing plants in Ponger Town, a small town located in the United Kingdom (UK). During the last two years the business has lost a number of important customers to overseas competitors and has had to fire 30% of its workforce. While the increased competition poses a significant threat to the company, it must also cope with the potential introduction of increased environmental regulation for the plastics industry. The new regulation aims to reduce greenhouse gas and carbon emissions and its impact is currently being assessed by the UK government. In response to the planned environmental legislation, company representatives have prepared a report entitled \"The UK plastics industry: economic growth versus environmental impacts\" which highlights the adverse impact that the new regulation will have on UK plastic manufacturers. Francis Fibs, the Company President, is due to present this report to a House of Commons Select Committee in London next week. The case opens with Sam Slick, the company's Finance Director, discussing the company's environmental impact report with Eddie Ethics, the Head Accountant. \"I thought we understood each other Eddie. I can't believe that you are threatening to go public with your stupid statements about this report. You're about to damage all the important things in your life: your career, your friendships and your company!\" After thinking for a moment, Eddie offered a reply: \"I'm sorry, Sam. I know how much this means to you, but I don't think I have a choice in this matter. I can't sit by while we allow this report to be presented to the UK government. We both know that these numbers have no foundation, as pollution filters will not cost that much to fit and maintain.\" Sam continued his verbal assault on Eddie: \"Well, Eddie, your stubbornness is causing a problem. I will get Francis Fibs, and we will see what he thinks about your opinion\". As Eddie waited for Sam to return, he thought about his ten years working at Pongy Plastic. Eddie started working at the firm as a factory janitor just after he left high school. After injuring his leg at work, Eddie was transferred to a desk job in the accounting office. While an accounting clerk's salary was low, his talent for financial analysis brought him to the attention of senior management. The company paid his university tuition fees and gave him time-off to complete his Chartered Institute of Management Accountants (CIMA) professional certification. He won a CIMA award for his exam performance, and was recently promoted to Head Accountant. With two children, a wife and a large mortgage, Eddie was grateful for his promotion. Although this position meant more pay and a new challenge, it also removed him from day-to-day financial analysis and operating decision-making. 1 The office door opened, and Sam entered with the President. Mr Fibs had worked for the company for thirty years and had a solid reputation in the UK plastic industry. Francis' booming voice broke the silence \"What's your issue, Eddie? Sam tells me that you have some concerns about the report we submitted to the UK government.\" Eddie thought for a moment and then replied: \"Well, I think we, 'the company', have some major issues here. Our report indicates that the entity will have financial problems if it is forced to install additional effluent monitoring and filtering equipment. It even states that we will be pushed into bankruptcy if the new regulation is implemented. However, we know that these cost estimates are a mirage, and do not include the real price of the required technology. There's no way that our operating costs will increase by 90% if the green regulation is implemented. The report's author either guessed at the environmental costs involved or tried to provide a biased account of the financial impact of the legislation. To my knowledge, no one at the company has tried to manage green issues or attempted to reduce environmental costs. When these figures are presented to Government, someone must testify under oath as to the truthfulness of this report, and it is a pack of lies and inaccuracies. The cost estimates are far too high. The report even predicts that industry revenue will fall by 10% per year as a result of a national recession. Our internal managerial forecasts suggest that industry revenues will actually rise by 25% per year as the global economy is expected to demand much more plastic.\" Francis Fibs quickly responded to Eddie emotional outburst: \"Slow down, son, we have to use different figures for different purposes. When we report to our stockholders, we give them numbers that are substantially altered from our internal documents, right? In this case, we have to make sure those muppets in government see the damage that the regulation may cause our industry. Besides, they already know we're going to inflate and bias the numbers to that suggest that the regulation is too costly.\" Eddie could not believe what he was hearing: \"But this isn't simply a matter of presenting the figures differently according to who the end user is. These numbers are fabricated, misleading, and fail to account for the damage that we're doing to the river and local wildlife. I talked to our production engineer a week ago, and he assures me that the stuff we are currently dumping into the river has already been eliminated from our competitor's products. The local community is effectively drinking our effluent. We are going to be subject to a huge lawsuit if they ever trace it back to us - we should account for this liability, not ignore it. Furthermore, customers are now requiring that plastic suppliers possess an accredited environmental management system before they will even accept an order from them. I think our approach to this issue is misguided and strategically short-sighted. We have to think about our external environment, customers, competitors and other stakeholders. We clearly don't consider our stakeholders or the environment, since we don't even try to recycle and reuse our waste plastic and water. Francis snorted with disdain at Eddie's comments: \"What total rubbish, our mission is to produce our products at the lowest possible cost. This strategy has worked successfully for many years, and no 'hippie' environmentalist is going to change things now. Environmental protection costs us money. According to the figures within our report, this idiotic new legislation will increase product costs and force us to raise prices. That is the situation, and 2 there is nothing more to say about it. Accounting figures never lie, and always show the true reality of things\". Eddie was astonished by Francis' response: \"Our competitors have invested in new technology and use raw materials that reduce effluent levels. Price and cost are not the only factors we need to consider when designing and manufacturing our products. Quality levels are increasing across the industry, but we don't even try to measure strategic issues, such as product quality or customer satisfaction. Many customers may actually pay more for 'green' products, and government clients expect a 'greener' product at no extra cost. Our strategy is out of date and our financial analysis and management accounting systems should be telling us this. Being 'greener' could reduce cost and attract customers, but our report overlooks this. We should change our figures, or we could ultimately face legal action from supplying misleading information under oath. If we do face legal action, you could go to jail, and I could get my professional accounting certification revoked. As a member of a professional accounting body, I must adhere to a professional Code of Ethics you know.\" The mention of legal action made the President extremely angry: \"We'll cross that bridge when we come to it. You've got to remember what is at stake here. The town of Ponger depends on our company. It's your buddies you'd be threatening to put out of work, Eddie. This legislation may not bankrupt us, but it will certainly put a squeeze on profits. If profits are gone, there will be no more bonuses. Lower profits will also convince head office that there is zero value in investing in new production machinery for our plants.\" The President poured a glass of whiskey, and continued: \"The bottom line is this, Eddie. You're an important part of our team - we've invested a lot in you. Sam was talking about working you into a new role with an increased salary. We'd hate to let you go because of this issue. However, we need to have everyone working towards the same goal, especially with the market pressures we face. In addition, Sam tells me that this isn't even your responsibility. If you hadn't picked up a copy of the report from my desk, you wouldn't be involved or even know about the report. Take the rest of the day off, and spend some time with your family. Think this through and I'm sure you will see the long-term benefit of our strategy. This pollution problem is just a passing phase in society. Besides, we've had the problem for as far back as I can remember. A few extra years won't hurt. The planet can cope, and our customers don't really care about our environmental performance.\" REQUIRED: Assuming that you are Eddie Ethics, discuss answers to the following questions: 1. Using either the Statement of Ethical Professional Practice issued by the Institute of Management Accountants' (IMA) or The Code of Ethics for Professional Accountants published by CIMA as your guide, determine whether there is an ethical issue for you in this scenario. Within your answer apply the Code's fundamental principals/standards (i.e. integrity, objectivity, competence and confidentiality) to the case data and explain whether each is a relevant factor when determining Eddie's ethical position. 3 References: IMA (2014) Statement of Ethical Professional Practice, Montvale: IMA, Available from: http://www.imanet.org/-/media/021b81bc074f49cc81480473f8a88fce.ashx [accessed January 10, 2017] Also see p. 959-960 of the Nobles et al textbook. CIMA (2013) Code of Ethics for Professional Accountants, London: CIMA, Available from: http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/2015%20code%20of %20ethics/CIMA_Code_of_Ethics2.pdf [accessed January 10, 2017] The Code's fundamental principles are outlined on page 4. CIMA also provides an ethical checklist when applying its Code: http://www.cimaglobal.com/Global/Images/standards-andethics/ethics_checklist_web_June2015_update.pdf 2. Assuming that you are Eddie, discuss what you would do to resolve this situation. Submission requirements: On your submission, write out the question and then put your answer immediately below the question. This is a business class and I want succinct answers. I am not looking for paper length, but the fewest words to correctly answer the questions. In the business world, you do not write a five page memo if one paragraph is sufficient. Deadline for your submission is April 13, 2017. Please upload your answers in the same Ethics Paper web link that you used to download this Word document. 4