Review the Statement of Ethical Professional Practice Standards promulgated by the Institute of Management Accounting (IMA): competence, confidentiality, credibility, and integrity. Now consider these five independent budgeting situations:

i. The technology team intentionally padded the budget so that they would get a bonus for spending less than budgeted.

ii. To meet the gross margin target, some fixed manufacturing overhead was listed as administrative operating costs. Total costs on the budgeted income statement are correct.

iii. To avoid alarming the controller, the budgeting director used a much lower interest rate cost than was quoted by the bank. The finance director believes that interest rates will drop; otherwise, a new, very promising product may not get approval.

iv. The sales team is paid an extra commission for the percentage increase in sales from previous periods. The marketing director underestimated the sales for this period and suggested to the sales team that they encourage customers to defer some purchases until next period so that the salespeople would get a higher commission.

v. Since her bonus is based on income, the accounting manager suggested to the chief operating officer to defer scheduled maintenance on equipment.

a. Identify for each situation if one of the IMA Standards was violated. Discuss the standard and be specific.

b. Give your recommendation.