Acct Ethics & related regulation issue

Acct Ethics & related regulation issue.

Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from the college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked to prepare a sales budget for the year 2011. He conducted a thorough analysis and came out with projected sales of 250,000 units of product. That represents a 25 percent increase over 2010.

Daniels went to lunch with his best friend, Jonathan Walker, to celebrate the completion of his first solo job. Walker noticed Daniels seemed very distant. He asked what the matter was. Daniels stroked his chin, ran his hand through his bushy, black hair, took another drink of scotch, and looked straight into the eyes of his friend of 20 years. Jon, I think I made a mistake with the budget.

What do you mean? Walker answered.

You know how we developed a new process to manufacture soaking tanks to keep the ingredients fresh?

Yes, Walker answered.

Well, I projected twice the level of sales for that product than will likely occur.

Are you sure? Walker asked.

I checked my numbers. I’m sure. It was just a mistake on my part, Daniels replied.

So, what are you going to do about it? asked Walker.

I think I should report it to Pete. He’s the one who acted on the numbers to hire additional workers to produce the soaking tanks, Daniels said.


But what happens if I’m right and the sales numbers were wrong? What happens if the demand does not increase beyond what I now know to be the correct projected level? Daniels asks.

Well, you can tell Pete about it at that time. Why raise a red flag now when there may be no need? Walker states.

As the lunch comes to a conclusion, Walker pulls Daniels aside and says, Jack, this could mean your job. If I were in your position I’d protect my own interests first.


  1. What should an employee do when he or she discovers that there is an error in a projection? Why do you suggest that action? Would your answer change if the error was not likely to affect other aspects of the operation such as employment? Why or why not?
  2. Identify the stakeholders potentially affected by what Daniels decides to do. How might each stakeholder be affected by Daniels’s action and decision? Use ethical reasoning to support your answer.
  3. Assume Daniels is both a CPA and holds the Certified Management Accountant (CMA) certification granted by the IMA. Use the ethical standards of these two organizations to identify what Daniels should do in this situation


  • Typed
     • Double-spaced
     • Title page with assignment title, student name, course name, week number, and date
     • Reference page

The grading rubric below shows the scoring for the case study reports and the papers:
Category Points % Description
Documentation & formatting  5 12.5 A quality paper will include a proper title page and references (as noted above).
Organization & cohesiveness 10 25 A quality paper will include an introduction stating the purpose/intent of the paper (5%). The body of the paper will be derived from the assignment itself, and it will be properly subdivided into sections based upon what the paper must address (5%). In a quality paper, the conclusion will summarize the previously presented content (5%).
Editing  5 12.5 A quality paper will be free of any spelling, punctuation, or grammatical errors. Sentences and paragraphs will be clear, concise, and factually correct.
Content  20  50 A quality paper will have significant scope and depth of analysis/research to support any statements. Relevant illustration or examples are encouraged. A quality paper will employ sound use of reasoning and logic to reinforce conclusions, and opinions must be supported.
Total  40 100 A quality paper (and presentation) will meet or exceed all of the above requirements.


Acct Ethics & related regulation issue

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