You are an accountant in the budgetary, projections, and special projects depart

Question

You are an accountant in the budgetary, projections, and special projects department of American Conductor, Inc., a large manufacturing company. The president, William Brown, asks you on very short notice to prepare some sales and income projections covering the next 2 years of the company’s much heralded new product lines. He wants these projections for a series of speeches he is making while on a 2-week trip to eight East Coast brokerage firms. The president hopes to bolster American’s stock sales and price.
You work 23 hours in 2 days to compile the projections, hand deliver them to the president, and are swiftly but graciously thanked as he departs. A week later you find time to go over some of your computations and discover a miscalculation that makes the projections grossly overstated. You quickly inquire about the president’s itinerary and learn that he has made half of his speeches and has half yet to make. You are in a quandary as to what to do.
Address the following questions:

1. Please define the word “ethics” and summarize what issues/ramifications might apply to this example.
2. What are the consequences of telling the president of your gross miscalculation, both ethical and non-ethical?
3. What are the consequences of not telling the president of our gross miscalculations, both ethical and non-ethical?
4. Are there other ethical implications or issues that you and the president need to consider in this situation?

Explanation / Answer

1.Ethics are the codes that require the members to maintain a certain level of self discipline that goes beyond the requirements of laws and regulations.

Here the accountant was required to give projections within an extremely short period. He was overworked and naturally, this resulted in miscalculations.

2.It is his ethical responsibility to open up his errors to the president.This is because the prospective investors have based their decision on miscalculated figures.

It is also the ethical responsibility of the president to inform the prospective investors of the true picture.

3.If the president is not informed of the miscalculation,the company might get many potential investors today. But in the future , if the targets are not reached, they might all withdraw their funds.

4.Correct information needs to be given to potential investors so that they base their decisions on accurate information. Calculating projections require a long time and to give them within a short time would ensue in chaos as has been seen.

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