Aicpa Ethical Dilemmas

As accountants, we have an ethical obligation under the AICPA Code that requires us to place the public's interest ahead of all other interest, including our own self-interest and that of our employer or client. We must be independent, make decisions objectively, exercise due care, and must act with integrity. The standards of the Institute of Management Accountants (IMA) are similar to the Professional Conduct in the AICPA Code. Moreover, the principles of the AICPA Code include responsibilities, the public interest, integrity, objectivity and independence, due care, and scope and nature of services. The IMA provides guidance on issues relating to competence, confidentiality, integrity, and credibility. The Resolution of Ethical Conflict section

Richart is facing a dilemma. First, he is obligated by the competence standard to follow GAAP, relevant laws, regulations, etc. in reporting financial information. Furthermore, Mr. Richart has the obligation to disclose all relevant information, including the recognition of expenses from buying the cellular parts upon delivery, per the General Electronics, Inc., Accounting Policy Manual. The action of delaying the recognition of the delivery of the parts until the beginning of the year is an unethical act because it will reflect a falsified higher amount of income, could influence an intended user's understanding of the financial report, and/or affect the long-term relationship with the supplier. The CEO has stated her policy as follows: “I won't interfere with operations in the divisions. I am available for advice, but the division vice presidents are free to do anything they want so long as they hit the target profits for the year.”. At this point, Mr. Richart's should follow the Resolution of Ethical Conduct procedures outlined in the IMA Standards and take the matter up the chain of command. If they decide to back up the CEO's position of nondisclosure then Mr. Richart's should seek outside advice from a trusted advisor, including an attorney, to help evaluate legal obligations and rights concerning the ethical conflict. The danger for Mr. Richart's would be if he goes along with the improper accounting… the venture capitalists find out about the misstatement in the financial statements at a later date, and the Mr. Richat is blamed both by the company and the venture