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Management and Accounting Ethics

            Steve Smith is in an ethical dilemma. As a new hire to his company he is tasked write writing a costing analysis that will serve as the basis for a major decision. The costing analysis will be done to serve as the basis for a decision to close the plant. Steve has observed that the cost structure and overhead to run the plates make the state-of-the-art plant uncompetitive. The decision has been made to close the plant and move all volume to an affiliated facility. Steve is asked to do a presentation on his analysis, knowing that his analysis will most likely mean the loss of employment for himself and all of his colleagues at the plant.
             The IMA Statement of Ethical Practice is a good guideline to use when facing ethical dilemmas. The main purpose of the statement is to set principals of honesty, fairness, objectify and responsibility to its members. It is built around four standards: competence, confidentiality, integrity, and credibility. Steve is asked to keep his work on the cost structure confidential. One of the standards in the IMA Statement of Ethical Practice is confidentiality. It states that professionals must keep information confident except when the disclosure is authorized or legally required. In this case, Steve should keep his work and their findings confidential. Sharing this information to other employees would be unethical. It would create fear within the company and his work on the cost structure should only be shared with his boss and upper levels of management.
             Steve also has an obligation to report his analysis in a truthful and accurate manner. Even though his analysis will find the plant will close, and this will mean Steve's job will also be eliminated. Steve has a responsibility to communicate and disclose his information with integrity and credibility. The IMA standards address that one must disclose all relevant information. If Steve reported wrong information purposely in order to save his job, his ethical character and future professional reputation would be damaged.


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