Question

Paul Sarver is the controller of a corporation whose stock is not listed on a national stock exchange. The company has just received a patent on a product that is expected to yield substantial profits in a year or two. At the moment, however, the company is experiencing financial difficulties; and because of inadequate working capital, it is on the verge of defaulting on a note held by its bank.

At the end of the most recent fiscal year, the company’s president instructed Sarver not to record several invoices as accounts payable. Sarver objected since the invoices represented bona fide liabilities. However, the president insisted that the invoices not be recorded until after year-end, at which time it was expected that additional financing could be obtained. After several very strenuous objections expressed to both the president and other members of senior management Sarver finally complied with the president’s instructions.

Please discuss:

Did Sarver act in an ethical manner? Explain & cite IMA's ethical standards.

Answer 1

No Sarver didnt act as in an ethical manner. Here he violated the integrity standard oin the IMA's ethical

standard.actually he is hiding the company 's account payable inorder to attract outsiders or for other organizations needs(its a window dressing).here he is engaging activity that would prejudice duties ethicaly.

IMA ETHICAL STANDARDS:

there are 4 stadards

1)competency

   competency simply means just keeping our proffessional qualification and skill perfect and ethically.

•    by developing knowedge and skills maintain an appropriate level of profeesional expertise
• perform duties according to the rules and regulation
• communicating of proffessional limitation .

2)confidentiality

       confidentiality simply means just protect the valuable information by keeping the information confidential.Expose the information according to the needs of the organization or if there is legal requirement.and also dont engage in any activity which will use the informations

for any uethical or illegal purpose

3)integrity

in integrity each member has a responsibilty to

• reduce the activity which compramises the ethical conduct
• regulary communicate to bussiness associates to mitigate conflicts.
• dont support any activity that might discredit your proffession

4)credibilitty

     credibility ties closely with confidential standard.inorder to credible a person shold be competent. it is the management accountant's duty to plan ahead and assess potential risks, gather enough information to be fully informed about all relevant facts, and communicate unfavourable news promptly.

• communincate the information fairly and objectively
• disclose information that could influence intended user understanding and decision making.