Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar test bank

Answer:  TRUE
Explanation:  If a managerial accountant suspected his or her immediate superior of wrongdoing, the managerial accountant should first present the situation to the next higher managerial level.
Diff: 2
Objective:  7
AACSB:  Ethical understanding and reasoning
 
17) The Institute of Management Accountants provides a hotline to discuss ethical issues.
Answer:  TRUE
Diff: 1
Objective:  7
AACSB:  Analytical thinking
 
18) When faced with a potential ethical conflict, the managerial accountant should first consult IMA ethics counselor.
Answer:  FALSE
Explanation:  The managerial account should first discuss the issue with their immediate supervisor except when it appears that the supervisor is involved. In that case, present the issue to the next level.
Diff: 1
Objective:  7
AACSB:  Ethical understanding and reasoning
 
19) IMA's overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.
Answer:  TRUE
Diff: 2
Objective:  7
AACSB:  Ethical understanding and reasoning
 

 
20) Integrity is to abstain from engaging in or supporting any activity that might discredit the profession.
Answer:  TRUE
Diff: 1
Objective:  7
AACSB:  Ethical understanding and reasoning
 
21) List the four standards of ethical conduct for management accountants.  For each standard, give an example that demonstrates compliance with that standard.
Answer:  Please note that answers may vary, but may include the following:
 
1.    Competence:  Maintain an appropriate level of professional expertise by continually developing knowledge and skills
 
2.    Confidentiality: Refrain from using confidential information for unethical or illegal advantage
 
3.    Integrity: Abstain from engaging in or supporting any activity that might discredit the profession
 
4.    Credibility: Communicate information fairly and objectively
Diff: 2
Objective:  7
AACSB:  Ethical understanding and reasoning
 
22) You have been employed as an entry-level management accountant for a little under a year. You suspect that your immediate supervisor is involved in a significant fraud involving diverting of company assets to personal use. Briefly describe the steps you might take to resolve this dilemma.
Answer:  The management accountant should first consult any internal company procedures concerning the resolution of ethical issues, and make sure these procedures are followed as closely as possible. If these policies do not resolve the situation, present the facts to the next higher managerial 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. Clarify the relevant ethical issues with an objective advisor (e.g., Institute of Management Accountants hotline). Consult your own attorney to be aware of your own rights and responsibilities. If all internal review procedures have still not resolved the ethical situation, the managerial accountant might have to resign and write an informative letter to an appropriate representative of the organization, and perhaps notify other parties.
Diff: 3
Objective:  7
AACSB:  Ethical understanding and reasoning
 

 
23) A company controller, whose responsibilities include evaluating proposals for the acquisition and implementation of a new accounting information system, accepts an offer to attend an all-expense paid 4-day conference at a popular vacation destination. Discuss the ethical implications of attending the conference in light of the IMA's Statement of Professional Practice.
Answer:  The value of the "gift" must be considered as acceptance of an all-expense paid trip paid for by a potential vendor could be viewed as a real or apparent conflict of interest. The integrity standard states that a management accountant has a responsibility to mitigate actual conflicts of interest.  In addition, the same standard (integrity) also states that a management accountant should refrain from engaging in any conduct that would prejudice carrying out duties ethically. The personal benefit enjoyed by the controller by accepting a paid trip to a vacation spot might influence (prejudice) the purchase decision. An important factor would be how necessary is it to travel to evaluate the system and is this a practice (traveling to a conference) necessary to evaluate all alternatives under consideration.