Case Study 1-8: a Faulty Budget Essays

621 Words Oct 5th, 2014 3 Pages
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?
An employee should immediately report and error when it is discovered. All employees, especially employees who are burdened with the task of making projections which may impact the furute of the company must act with integrity. “According to Mintz, “Integrity is a fundamental trait of character that enables a CPA to withstand client and competitive pressures that might otherwise lead to the subordination of judgment.”3 A person of integrity will act out of moral principle and not
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Stock holder and other investors in the company make purchase and sell decisions based upon the projections. The government reviews these projections particlularly in publicly traded companies. The operations and reporting of this nature can call into question the entire oversight system for the government. Consumers of the products and services can be affected by the price fluctuation, and the reputation of the company and its new technology to keep the fish in the new tank system. The community as a whole can form a negative opinon as to the reputation of the company and impact the demand for the product.
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. (Steven M Mintz 42-43)
First, he must accept that a mistake has been made. Next he must review the budgeting projections and reports to determine if a mistake has actually been made. Once he has confirmation of the mistake, he should get a second opinion on the matter. Another qualified individual should review the calculations made for the budgets. Finally, he should take action on the mistake and report it to his superior. After this he should ensure that the mistake is corrected and the proper stakeholders are notified. If the mistake is not corrected by his superior then he should take it to the next higher authority in…

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