Accountants often consider it a part of their job to help their organizations succeed. Often, his assistance means developing strategies to maximize the organization's cash flows. For example, accountants promote income tax strategies to help companies minimize income tax payments. Similarly, accountants might promote strategies to maximize reimbursements under cost-based contracts. This type of strategy might encourage accountants to include a cost in an indirect cost pool when there is uncertainty about whether it is allowed.
REQUIRED INFORMATION ANALYSIS
The following questions will help you analyze the information for this problem. Do not turn in your answers to these questions unless your professor asks you to do so.
A. Explain why accountants must often use judgment to decide whether a particular cost is reimbursable under a cost-based contract.
B. Discuss whether maximizing reimbursements under cost-based contracts is an ethical issue for accountants.
C. Is your answer to Part B affected by the size of a potential overcharge? Why or why not?
D. Identify the major groups of stakeholders for this problem. From the perspective of each major stakeholder group, discuss the pros and cons when accountants help their organizations maximize reimbursements under cost-based contracts.
E. What trade-offs must accountants make when deciding whether to help their organizations maximize reimbursements under cost-based contracts?
REQUIRED WRITTEN ASSIGNMENT
Turn in your answer to the following.
F. Use the information you learned from the preceding analyses to help you write an essay in response to the following question: Is it ethical for accountants to help their organizations maximize reimbursements under cost-based contracts?