Question

mith Manufacturing Company allows employees to purchase materials, such as metal and limber, for personal use at a price equal to the company's cost. To purchase materials, an employee must complete a materials requisition form, which must then be approved by the employee's immediate supervisor. Brian, an assistant cost accountant, then charges the employee an amount based on Smith's net purchase cost. Brian is in the process of replacing a deck on his home and has requisitioned lumbar for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Brian reviewed all the purchase invoices for the past year. He then used the lowest price to compute the amount due to the company for the lumber. The Institute of Management Accountants (IMA) is the professional organization for managerial accountants. The IMA has established four principles of ethical conduct for its members: Honesty Fairness Objectivity Responsibility These principles are available at the IMA website (Links to an external site.). Question: Using the IMA's four principles of ethical conduct, evaluate Brian's behavior. Has he acted in an ethical manner? Why or Why not?

Answer 1

Answer:

Brain didn't act ethically and didn't follow IMA's principles of ethical conduct.

IMA's 4 principles are:

1. Competence: this refers to basically acting and performing in a professional manner. Brian didn't act professionally since he intentionally miscalculated the price of lumber in order to get the lowest possible cost.
2. Confidentiality: refers to keeping information to yourself, i.e. do not tell outsiders about the specifics of your job. This principle was not an issue here.
3. Integrity: refers to avoiding conflicts of interests. Obviously Brian didn't follow this principle since he is taking advantage of the company's policy and acting unfairly.
4. Credibility: refers to information and all the respective analysis being correct and true. Since Brian is deliberately cheating on the company, he is not using the correct information on purpose and is lying.