In: Accounting
What are some specific ethical issues managerial accountants can face while holding the position of a controller for a company that provides utility services , temp power, electricity, gas, etc.? Describe a specific ethical issue you might face in that position .
The company maintains more than 48,000 miles of power lines and is an industry leader in using automated power restoration technology.
The duties of the position would include the following:
*compliance, bank reconciliations
Usually in the organisation the role of accountnat and management accountant is different since the their roles and responsibilites are quite different and sometime it results in ethical issues.
The responsibilities of Management Accountant covers definining management accounting system so that they can get desired management report which aid in decision making. The Management accountats are widely involved in analysing various business decision making.
The role of accountant is to ensure that the transaction are accounted in line of local GAAP, ensure internal control and governance process, protect company's interest and assets.
When accountnat is also responsible for management account following ethical issue arises :
Conflicting Interests : A management accountant who helps operational managers usually try to make his department peforms better & in that process may have conflict of interest considering accountant role which ask him to protect overall company's interest
Availability of detais & therby impacting information availability for decision making: Usually accounting team is responsible for recording transaction and while recording the transactios they have to cater the requirements for management accounting e.g. assing cost to cost centre, profit centre, internal order etc. When one person performs role of accountant and management accountant it may happen that the accounting team would go for easy ways to record the transaction while if the role of managment account is different he would ensure that the gets requistire detail.
Overvaluation of Inventory : The Management account can improve the profitability of current year by showing higher value of inventory and this is achieved by treating possible cost as production cost whereas as an accountant he duty is determine inventory in line of applicable GAAP and also ensure that inventory is not overvalues so that financial statement reflects true and fair view
Cost Allocation : Being a management accoutnat depending on the requirement you would have arguments how cost allocation should happen however as an accountnat you would like to make it happen in most reasonable way so as not alter principle time and again