About IMA® (Institute of Management Accountants) IMA, the association of account

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About IMA® (Institute of Management Accountants) IMA, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 85,000 members in 140 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/ India. For more information about IMA, please visit www.imanet.org.

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Ethical dilemmas relating to standards Austin Landers is the accountant for Sun Coast, a manufacturer of outdoor furniture that is sold through specialty stores and internet companies. Annually, Landers is responsible for reviewing the standard costs for the following year. While reviewing the standard costs for the coming year, two ethical issues arise. Use the IMA's Statement of Ethical Professional Practice (in Chapter 1) to identify the ethical dilemma in each situation. Identify the relevant factors in each situation and suggest what Landers should recommend to the controller Issue 1: Landers has been approached by Dara Willis, a former colleague who worked with Landers when they were both employed by a public accounting firm. Willis recently started her own firm, Willis Benchmarking Associates, which collects and sells data on industry benchmarks She offers to provide Landers with benchmarks for the outdoor furniture industry free of charge if he will provide her with the last three years of Sun Coast's standard and actual costs. Willis explains that this is how she obtains most of her firm's benchmarking data. Landers always has a difficult time with the standard-setting process and believes that the benchmark data would be very useful

Explanation / Answer

IMA's overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. Members shall act in accordance with these principles and shall encourage others within their organizations to adhere to them.

There are prescribed standards uner IMA , Chapter 1 which will be helpful in answering teh below issues :

Issues 1 : One of the most important principle is CONFIDENTIALITY

Each member has a responsibility to: 1. Keep information confidential except when disclosure is authorized or legally required. 2. Inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates' activities to ensure compliance. 3. Refrain from using confidential information for unethical or illegal advantage.

Another principle is INTEGRITY :

Each member has a responsibility to: 1. Mitigate actual conflicts of interest, regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. 2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically. 3. Abstain from engaging in or supporting any activity that might discredit the profession.

Hence this is an unethical behaviour, which needs to be reported to teh Those charged with Governance at the earliest so that appropriate steps can be taken for this. Lander's should not leak out any information to Wills, he should keep his integrity and confidentiality.

ISSUE 2 :

COMPETENCE Each member has a responsibility to: 1. Maintain an appropriate level of professional expertise by continually developing knowledge and skills. 2. Perform professional duties in accordance with relevant laws, regulations, and technical standards. 3. Provide decision support information and recommendations that are accurate, clear, concise, and timely. 4. Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

CREDIBILITY Each member has a responsibility to: 1. Communicate information fairly and objectively. 2. Disclose all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. 3. Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.

Lander should apply his competence in measuring the standard cost while factoring in all the relevant details and supportings. He should disclose all teh materal facts while evaluating teh standard cost. He should not let anyone hinder his evaluation process. The report issued by him should be credible enough to be used bY THOSE CHARGED WITH GOVERNANCE in order to detect any loopholes in the internal controls, if any.

In both the issues, if Lander fails to follow the above said standards, may result in disciplanary action against him.

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