The following case study was adopted from:

Brooks, L.J. and Dunn, P., 2018. Business & Professional Ethics. Cengage Learning, pp.233-34.

Just Make the Numbers!

The discussion between Don Chambers, the CEO, and Ron Smith, the CFO, was getting heated. Sales and margins were below expectations, and the stock market analysts had been behaving like sharks when other companies published quarterly or annual financial results failed to reach analysts expectations. As a results executives of companies whose performance numbers failed to meet the levels projected by the executives or the analysts were being savaged.

Finally, in frustration, Don exclaimed.

We must make our quarterly numbers! Find a way, change some assumptions, capitalise some line expenses- just do it! You know things will turn around next year.

And he stormed out of Rons office.

REQUIRED:

(a) What are the ethical issues involved here? Briefly explain.

(b) Briefly explain what Ron, the CFO, should do.