What steps should a management accountant take if established written policies provide

insufficient guidance on how to handle an ethical conflict?

1.) Discuss the issue with your immediate supervisor except when it appears that the supervisor is
involved. In that case, present the issue to the next level. If you cannot achieve a satisfactory resolution,
submit the issue to the next management level. If your immediate superior is the chief executive officer
or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive
committee, board of directors, board of trustees, or owners. Contact with levels above the immediate
superior should be initiated only with your superior’s knowledge, assuming he or she is not involved.
Communication of such problems to authorities or individuals not employed or engaged by the
organization is not considered appropriate, unless you believe there is a clear violation of the law.

2.) Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor or
other impartial adviser to obtain a better understanding of possible courses of action.

3.) Consult your own attorney as to legal obligations and rights concerning the ethical conflict.

Why are ethics and professional conduct so important in the accounting professions?
Accounting is an essential part of any business because it involves keeping track of and making sense of
financial information to help make decisions. However, the credibility of financial information depends
heavily on the ethical conduct of accountants. The importance of ethics in accounting is critical for the
success of any business.

One of the main reasons why ethics are essential in accounting is because they make sure that financial
reports are accurate and precise. Financial statements are the backbone of any business and must be
correct to understand and track money. Ethical accountants will not manipulate data to make their
clients' financial situation look better than it is. Instead, they will provide accurate financial reports
reflecting the company's financial situation.

Furthermore, ethical accounting practices promote accountability and trust. Investors, shareholders, and
the public can trust a company's financial reports if they are easily understood. This trust is essential for
the success of any business as it provides a solid foundation for long-term relationships. Conversely, if a
company is known to manipulate its financial data, it will not only lose the trust of its stakeholders but
will also face legal consequences.
Properly trained accountants will spot suspicious financial activities and report them to the proper
authorities. Doing so keeps the company from losing money and the public safe from fraud. In addition,
ethical accounting practices help to prevent fraud and other financial crimes. A lack of ethics in
accounting can create opportunities for fraudulent activities, such as embezzlement, misappropriation of
funds, and other financial crimes.

Moreover, ethical accounting practices promote a culture of integrity and professionalism. Companies
that prioritize ethical behavior in their accounting practices are more likely to attract and retain skilled
and honest accountants. Such professionals are motivated to work for companies that share their values
and are more likely to stay with the company for the long term. This stability promotes efficiency,
reduces employee turnover, and improves financial outcomes.

Ethics are important because they promote accuracy, openness, responsibility, and professionalism.
When it comes to accounting, companies that put ethics first are more likely to build trust with their
stakeholders, avoid financial losses, and be successful in the long run. So, companies need to put money
into training their accountants in ethics and prioritize ethics in their accounting practices.

What accounting practices would need to be adopted to account for all of the physical
inputs and outputs of a large organization?
Large business firms involve very many activities and transactions which happen every day. If there is no
proper recording in such a business, a lot of data might miss, and this can result in a loss of money.
Without financial records, it is difficult to trace funds.

There are three primary accounting practices used in monitoring physical inputs and outputs in a
company.

a.) The cash method is useful in recording sales when payment is successful, whereas the recording of
an expense occurs when a bill payment is successful.

b.) The accrual method uses the matching principle between expenditures and revenue. The approach
intends to provide a more accurate state of a business in terms of its exact financial position. Here,
recording of transactions happens once incurred and before payment is successful.

c.) The other method incorporates the cash and accrual basis.
The use of these accounting methods helps a business to be able to track all its expenses as well as
maintenance of accurate records concerning business operations and transactions. Besides the recording
of buying and selling of products, they also incorporate internal practices such as money transfer from
the business, payment of employees as well as maintenance practices - all these help in providing the
real trends of business in the form of profit or loss.

Miss Kim, corporate comptroller for Dumaine Industries, is trying to decide how to present
"Property, plant, and equipment" in the balance sheet. She realizes that the statement of
cash flows will show that the company made a significant investment in purchasing new
equipment this year, but overall she knows the company's plant assets are rather old. She
feels that she can disclose one figure titled "Property, plant, and equipment, net of
depreciation" and the result will be a low figure. However, it will not disclose the age of the
assets. If she chooses to show the cost less accumulated depreciation, the age of the assets
will be apparent. She proposes the following: 'Property, plant, and equipment, net of
depreciation $10,000,000' rather than 'Property, plant, and equipment $50,000,000 Less:
Accumulated depreciation (40,000,000) Net book value $10,000,000' (a) What are the
ethical issues involved? (b) What should Miss Kim do?

(a) The ethical issues involved in this situation revolve around transparency and honesty in financial
reporting. Miss Kim is considering presenting the company's assets in a way that may not fully disclose
their age or condition. While it's not technically wrong to present the net value of the assets after
depreciation, it could be misleading to stakeholders who may interpret the lower figure as a sign of poor
financial health or mismanagement. This could potentially affect their decisions related to the company,
such as investing, lending, or even employment.

(b) Miss Kim should aim for full transparency in her financial reporting. While it's understandable that
she might want to present the company in the best light possible, it's also important to provide a
complete and accurate picture of its financial situation. Therefore, she should opt for the second option,
which clearly shows the original cost of the assets, the accumulated depreciation, and the net book
value. This way, stakeholders can make informed decisions based on the true state of the company's
assets. It's always better to be upfront about these matters, as trust and integrity are crucial in business.

Discuss the possible ethical dilemmas in the field of accounting.

Ethical dilemmas in the field of accounting can arise in various situations, often due to conflicts of
interest, pressure from management, or the complexity of financial transactions. These are the
following:
Manipulation of Financial Statements: This is one of the most common ethical issues in accounting. It
involves altering financial statements to present a more favorable picture of a company's financial health
than what is actually the case. This can mislead investors, creditors, and other stakeholders.

Insider Trading: Accountants have access to sensitive financial information that can be used for personal
gain. Using this information to influence stock trading decisions is unethical and illegal.

Conflict of Interest: Accountants may face situations where their personal interests conflict with their
professional responsibilities. For example, they may be tempted to overlook certain discrepancies to
maintain good relations with a client or to secure a promotion.

Fraud and Embezzlement: Accountants are in a position where they could potentially manipulate
accounts for personal gain or to cover up financial mismanagement.

Non-disclosure: Accountants have a duty to report any financial irregularities they discover. Failure to do
so can lead to serious consequences for the company and its stakeholders.

Incompetence: Failing to keep up with changes in tax laws, accounting standards, and other regulations
can lead to errors in financial reporting. It's the accountant's responsibility to ensure they have the
necessary skills and knowledge to perform their duties effectively.

Bias: Accountants should maintain objectivity in their work. However, bias can creep in, especially when
dealing with subjective areas like the valuation of assets and liabilities.

To navigate these ethical dilemmas, accountants should adhere to a strong code of ethics, maintain their
professional competence, and prioritize transparency and honesty in all their dealings.