Case 2-4 A Faulty Budget (a GVV Case)
Nicholas Steven Cox
School of Business, Liberty University
ACCT 642: Accounting Ethics
Dr. Darnell Huntley
November 4, 2025
Introduction
The case A Faulty Budget shows Jackson Daniels, a newly hired accountant at Lynchberg
Manufacturing, who discovered a major budgeting mistake after he projected sales that
exceeded actual market potential by two times for the fiscal year beginning in 2021. When
Daniels discloses the mistake to the Vice President of Production, Jimmy (Pete) Beam, he is told
to keep the error confidential to protect management’s reputation and avoid potential layoffs.
The present circumstances challenge Daniels to uphold his integrity by resolving his conflict
between following orders and staying true to his beliefs. This discussion will examine Daniels'
ethical choices and his accounting practice duty to maintain honesty, using Mintz and Miller
(2025) together with the AICPA Code of Professional Conduct (2025) and biblical principles.
Daniels's Options and Ethical Reasoning
Daniels faces three possible actions regarding the error: conceal the error as instructed
by Pete, correct the report privately to address the overstatement in the production, or
privately meet with his boss, JB, the controller. Mintz and Miller (2025) state that accounting
professionals should base their ethical decisions on virtue ethics through principles that include
integrity, honesty, and courage. Remaining silent would violate AICPA ET §1.400.001, which
forbids knowingly misstating information in financial reports (American Institute of Certified
Public Accountants, 2025, ET §2.100.001). The most ethical solution demands that JB receive
the information because it will fix the mistake while keeping all parties informed. The scripture
tells us in Proverbs 12:22 (Holy Bible: New International Version, 2011) that, "The Lord detests
lying lips, but he delights in people who are trustworthy," establishing the moral obligation that
Daniel has. By confronting his mistake openly to Pete, Daniel demonstrates a level of
professional and spiritual integrity even at the risk of losing his job.
What Is at Stake For Key Parties?
Key stakeholders include Daniels, Beam, JB, the company, and its employees. The
situation puts Daniels' honesty and job security in danger while Pete faces threats to his
professional reputation and management authority. The company would likely face financial
instability and decreased employee morale due to its practice of information suppression and
the termination of employees. Endenich and Trapp (2020) explain that management accounting
ethical violations create two types of damage that affect both financial accuracy and
organizational moral standards. Daniels’s integrity supports the long-term health of the firm and
its ethical climate, preventing cascading harms from misinformation.
Daniels's Possible Arguments and Counterarguments
Daniel may face rationalizations such as: "it's a one-time event," "why raise a red flag
now when there may be no need?" or "revealing this will hurt others." Mintz and Miller (2025)
identify these as rationalization traps that enable people to accept unethical behavior in their
moral assessments. Research by Antoh (2024) reveals that internal auditors report misconduct
more frequently because they base their decisions on ethical values and professional standards,
rather than fear or organizational loyalty. Daniels's current practice of transparency now
prevents more reputational and operational consequences in the future. Upholding objectivity
ensures accuracy in managerial decisions and aligns with the AICPA principles of Integrity and
Due Care (American Institute of Certified Public Accountants, 2025, ET §0.300.040 &
§0.300.060). Response and Recommended Action
The most ethical response and recommendation is for Daniels to schedule a one-on-one
meeting with JB, his boss, and inform him of the calculation error supported by documentation
of the changes made to his budget forecast. In doing so, it would satisfy the AICPA ET
§1.300.001 for maintaining professional responsibility and integrity (American Institute of
Certified Public Accountants, 2025, ET §1.300.001). From a biblical perspective, Luke 16: 10
reinforces this action: "Whoever can be trusted with very little can also be trusted with much,
and whoever is dishonest with very little will also be dishonest with much." (Holy Bible: New
International Version, 2011). Daniels needs to inform JB that budget forecast corrections will
enable more accurate decision-making while preserving stakeholder trust and meeting all legal
obligations and moral duties. Daniels should also consider that the approach to JB also requires
a great deal of respect while also ensuring professionalism without deceit. Conclusion
The budgeting error disclosure by Daniels demonstrates both professional virtue and
biblical integrity. By choosing transparency over silence, Daniels affirms the biblical and
professional calling to serve with truth, justice, and the public interest. Ethical accountants must
exercise the courage to act righteously, even under pressure to confirm.
References
American Institute of Certified Professional Accountants. (2025). Code of Professional Conduct.
http://pub.aicpa.org/codeofconduct/Ethics.aspx
Antoh, A. (2024). A perspective on the whistleblowing intention of internal auditors. Cogent
Business & Management, 11(1). https://doi.org/10.1080/23311975.2023.2292817
Endenich, C., & Trapp, R. (2020). Ethical implications of management accounting and control: A
systematic review of the contributions from the Journal of Business Ethics. Journal of
Business Ethics, 163(2), 309–328. https://www.jstor.org/stable/45283700?seq=1
Holy Bible. (2011). New International Version. Bible Gateway.
https://www.biblegateway.com/passage/?search=Proverbs%2012%3A22&version=NIV
Mintz, S. M., & Miller, W. F. (2025). Ethical obligations and decision making in accounting:
Text and cases (2025 release). McGraw Hill Education.
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