Question

Exercise 1-3. [LO 4]

Guthrie Wilson is an accountant at Bellwether Systems, a company that sells and installs customer relationship management (CRM) systems. The company sells third- party software at cost plus 25 percent and charges a fee of $300 per hour of installation/integration time spent on each engagement. Recently Guthrie’s boss asked him to charge 60 hours of time to the Bradley account when the time was actually worked servicing the IMG account. The rationale: “Look, IMG is a struggling start-up and they can barely afford our service. We ran over our time estimate due to some unforeseen problems, and they’ll balk if we charge them for all of our time. Bradley, on the other hand, is a highly profitable company, and we’re providing services that are going to make them even more profitable. They’ll have no problem with their bill.”

Required:

Review the IMA’s ethical standards in the appendix. What do the standards suggest that Guthrie should do to resolve the issue he’s facing?

Answer 1

Independence responsibilities, the public interest, integrity; objectivity and independence, due care, and scope and nature of services are some of the ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct. Guthrie had the responsibility to disclose all the information and to disclose each and every material and true fact casts upon the CFO. Failure to disclose the information which has been perpetrated by the boss results in violation of the principle of integrity. It is the duty of Guthrie to follow the policies which have been established by the organization and try to reach a satisfactory solution of the issue. If it is not possible for Guthrie to resolve the issue then he must submit the issue to the next management level. If this issue is a matter then it is a clear violation of the law, in this case Guthrie has the option to communicate this matter to the outside authorities.