Critical Thinking

Management Accounting Professional Ethics:

Scenario: Steve Smith was recently hired as a controller for a chocolate bar manufacturing plant in the United States that is a division of a Swiss parent company. Steve is a direct report to the corporate U.S. CFO, Roberta Blake, and has an indirect reporting relationship to the plant manager, Rick White. Blake has indicated that the planned manufacturing volumes will drop significantly according to company forecasts over the next few years. The intent of the parent company is to close the plant in two years and produce the current volume in an affiliate plant in the Czech Republic. Blake has indicated that Smith must complete a costing analysis that will serve as the basis for decision-making for the plant closure; Blake has also indicated that this analysis is highly confidential due to its nature.

Having recently earned his degree and landed his first corporate position, Smith is understandably shaken by this news. He has observed that the cost structure, particularly the overhead required to run the plant, renders it uncompetitive with affiliate plants. White, the plant manager, asks Smith about the new forecast for next year’s planned manufacturing volumes, and would like Smith to prepare a short presentation for management once the analysis is complete. Smith realizes that an objective analysis will likely result in the loss of employment not only for himself but for all of his colleagues at the plant.

In a well-written paper demonstrating college standards, discuss an approach to resolving this ethical dilemma. What should Steve Smith do? Make sure to address the following questions, ensuring that your analysis pertains to issues concerning management accounting ethics:

What are Steve’s obligations regarding confidentiality in reporting results to Rick? Refer back to the IMA Statement of Ethical Practice to structure your response.
What are Steve’s obligations regarding preparation of an objective analysis in reporting results to Roberta? Refer back to the IMA Statement of Ethical Practice to structure your response.

Your paper should meet the following requirements:
3-4 pages in length
Format according to APA Requirements
Include at least three outside sources

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