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At the end of the chapter, you will find the Ethics information in S10-16. You should answer each of the 5 questions
S10-16. Identify ethical standards violated (Learning Objectives 1, 2, 3, 4,
5, & 6) [ETHICS]
For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional
Practice that is violated (competence, confidentiality, integrity, or credibility). Refer to Exhibit 1-7 for the
1. In casual conversation with friends on a Friday night, Peter talks about how transfer prices are set at the company where he is an accountant. As part of that conversation, he shares the variable costs of the company’s main product.
2. Jake, the controller who oversees transfer policies at Nealy Industries, does not inform management that his sister is the principal partner in a consulting firm that is bidding on work at Nealy Industries.
3. In the year-end report to the board of directors, Connor, the controller, prepares the performance report. The board will base the annual bonuses on this report. Connor designs the report so that the favorable Key Performance Indicators (KPIs) are displayed prominently, while the KPIs that are unfavorable are either not
included or are buried deep in the later pages of the report so that they are unlikely to be seen.
4. Each month, Kate, a corporate controller, prepares segment reports for all of the divisions of her company. In these reports, she includes every general ledger account. As a result, the report for each division is several pages long and no one except Kate and her staff can interpret the reports.
5. In the past six years since he graduated with an accounting degree, Phil has not attended any continuing education seminars. A major part of Phil’s job involves preparing performance reports. He has figured that he knows enough to do his job since he has not forgotten any relevant information from his college degree program.
Managerial Accounting, 6e