ACCT 311 LIBERTY UNIVERSITY Managerial Ethic Concerns _2018.pdf

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Managerial Ethic Concerns

ACCT 311-001

Fall 2017

Student Name ID #27229025

APA

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Chris McKinney

Professor Koss

ACCT 311-001

become an even bigger issue in recent times because nobody wants to be held accountable for

their own actions. Since nobody wants to have repercussions for their actions, certain rules must

be set in place. A certain set of standards, or codes, is needed to keep everyone in check. In

managerial accounting, the standards are not set by outside sources, but are actually set by the

managers within the company. “The Institute of Management Accountants, USA lists four areas

of ethical concerns. They are: Competence; Confidentiality; Integrity; and, Credibility” (Ghose,

2015, pg. 86). These four issues are very big reasons why there is a conflict in this area of

accounting.

Incompetence would not be tolerated in any professional position which is why it is an

ethical issue in managerial accounting. This issue is very critical when reporting financial

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that looks favorable. If the company does not fix this issue, then the investors will become

hostile once the company eventually changes their information. It is managements job to make

sure that the information reported is correct, and if it is not correct then it needs to be corrected:

could have occurred and the existence of the corporation could be in jeopardy (Ghose,

Not only does the wrong information mess up the managerial accounting balance information,

but it could also mean the destruction of the entire company. The destruction of the company

could happen because the investors could decide to leave because the trustworthiness of the

company is weakened. Employees can also be affected by this because if investors pull out, then

the net income goes down meaning that the employees could lose their jobs due to the loss.

Records should be accounted for and all costs should be recognized accordingly:

Actual production costs of a project do not take into account the costs of obtaining the

contract. We are not referring to the visible costs involved by the process of conceiving a

price offer and bidding on a project, but to the costs that remunerate the more or less legal

The solution is absolutely that simple, but the incentive to do that has to be high in order to

guarantee that it will happen.

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Secondly, Confidentiality is a major issue that is often ignored because it is normal for

people to talk about other people. This issue is mostly seen in banks, or other places where

extremely personal information is given. In managerial accounting, investors are going to be the

confidentiality is that private information is becoming more difficult to keep private with the

advancements in technology. Files used to be kept in paper form which made it difficult to keep

up with all of the customers that a company had, but it made all of the information confidential

because it was not easy to share that information. Checks and balances are a common theme in

taking care of the issues in managerial accounting, and for confidentiality there should be

multiple people dealing with the costumer information, so that if an issue arises it can be taken

care of. If an employee catches a coworker going against the rules and not keeping information

confidential, then that employee should report the coworker:

Opponents of whistleblowers tend to view them as ‘snitches’ and ‘tattletales’. It is

important for the workplace as well as in an academic setting, that these perceptions of

whistleblowers are changed and that ethical and moral behavior is promoted. (Bernardi,

Landry, Landry, Buonafede, Berardi, 2016, pg. 100)

Nobody should be afraid to report someone else because it is more important to do what is right

rather than worry about what others think about the situation. Knowing about the situation and

not doing anything about it is just as bad as being involved in the situation. Moral behavior is an

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ethical standards in determining who should be privy to the information in their

it gets out, then the whole company could be in jeopardy. Ethical standards are needed because

change reported information. Turning in those that do not follow these rules should be

encouraged more often:

Having established why the current level of whistle-blowing in a classroom environment

and the business environment is relatively low, this research provides accounting

educators with two ways to increase whistle-blowing when cheating is observed in their

classrooms – maintaining strict confidentiality and offering some type of cash reward or

bonus points for whistle-blowing (Bernardi, et al, 2016, pg. 89).

There must be some type of reward or incentive in order to increase the number of people that

are willing to report when there is a case of cheating. The reporters should not be judged for

doing the right thing, and their identity shall be kept confidential because if the cheater finds out

who reported them, then there could be more issues. The cheater is more than likely going to

feel betrayed by the reporter, and will seek retaliation in some way.

Integrity is another major issue that is overlooked because the attribute is not commonly

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accounting because without it there will be more issues that come from it. The truth is what

keeps people coming back because if someone consistently tells the truth, then other people will

be more likely to check them out because of the strong reputation. Trustworthiness is a strong

accurate numbers without tailoring and doctoring figures for ulterior motives. Whether

actions. This solution is an easy one to commit to, but it may not always be the best solution for

every corporation. Data and numbers should not be changed for any reason because that is not

going to help anyone in the long run. Changing numbers might look like it is helping the

company, but once someone catches that the company is committing an act of fraud, then there

will be more difficult hurdles to jump through. Managers strive to find the best solution for

maintaining good integrity:

Even the most ethical, well-intentioned senior managers face a challenge in determining

how to best control in and demonstrate the managerial integrity of their organizations. A

tool they typically employ to respond to this challenge is the internal system of

accounting records and auditing practices, the internal control system (Waters, Chant,

1982, pg. 61).

The internal control system is one of the most popular ways to try and manage the integrity of

the corporation. Every manager struggles with finding the best solution to this issue, but testing

out multiple solutions can show which one is the best. If one solution does not work, then it is

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efficiently. The solution that produces the best way to promote truth telling is going to be the

best fit for strong integrity.

Finally, credibility is an issue that deals with whether the information is worth taking a

or not it is credible or not:

Missing information or selective reporting of information to decision makers can result in

erroneous or suboptimal strategies because of the lack of quality of information at hand at

a given time for them to make sound decisions (Ghose, 2015, pg. 86).

Without the complete and correct information it is impossible to make a rational decision

because it could be the wrong decision. False information is not helping either party in the

overlooked because for investors they must take all of the information at face value. Investors

are affected the most when the information first comes out because nobody has checked the it to

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Ethical behaviour reflects both individual and situational influences, and is shaped by the

behaviour. Students typically learn principles of good conduct from their educational

experience, then receive advice and observe how others behave in the workplace

(Dellaportas, Leung, Cooper, Jackling, 2006, pg. 7).

Principles and ethics will be learned through experience, and observation of those who are

do. School systems work hard to make sure that their framework is built upon ethical principles.

accountant with high ethical standards:

Ethical standards should be upheld by all managerial accountants with exemplary ethical

leadership from top management. Additionally, without self-motivated ethical behavior

by management accounts, all codes, policies, and statements will end up as mere talk, it is

time every management accountant practiced to "Walk the talk" (Ghose, 2015, pg. 87).

Standards do not mean anything unless management is willing to follow their own rules and

enforce them when they are broken. Self-motivation is a big way that these standards can be

enforced throughout the company. Management must be the role models and show that in order

Ethical issues in managerial accounting can all be fixed by setting checks and balances,

and making sure that everyone is aware of the standards that the company has set forth. It is

ultimately up to the manager to make sure that the rules are set in place. Ethics need to be more

sought after in the business world because without ethics there is nothing that is going to help the

companies well-being. Most companies are more worried about their success than the rules that

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the company, then there is a slim chance that the company will actually be successful. Life is not

about how much money is made, but how morally the money is made. Lying about the amount

of money that is made, or how the money is made is a major issue in managerial accounting.

decision because it will show investors that the company is willing to put themselves on the line

in order to maintain strong ethical values.