Amy Kimbell was recently hired as an accounting manager for Hi-Quality Productions Inc., a publicly-held company...
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Amy Kimbell was recently hired as an accounting manager for Hi-Quality Productions Inc., a publicly-held company producing components for the automotive industry. One division, Alpha, uses a highly automated process that had been outsourced for a number of years because the capital investment required was high and the technology was constantly changing. Two years ago, the company decided to make the necessary capital investment and bring the operation in house. Since all major capital investments must be approved by the Board of Directors, the budget committee for the Alpha Division recommended the $4 million investment to the Board, projecting a significant cost savings. In her new job as accounting manager, Kimbell is on the budget committee for the Alpha Division. The Board has requested from the committee a post-audit review of the actual cost savings. While working on the review, Kimball noted that several of the projections in the original proposal were very aggressive, including an unusually high salvage value and an excessively long useful life. If more realistic projections had been used, Kimbell doubts that the Board would have approved the investment. When Kimbell expressed her concerns at the next meeting of Alpha's budget committee. she was told that it had been the unanimous decision of the committee to recommend the investment because it was thought to be in the best long-term interest of the company. According to the committee members, the post-audit report would not discuss these issues; the committee members believe that certain adjustments to the review are justified to ensure the success of the Alpha division and the company as a whole. REQUIRED: A. B. Using the categories outlined in IMA's Statement of Ethical Professional Practice. identify the standards that are specifically relevant to Kimbell's ethical conflict and explain why the identified standards are applicable to the situation. According to IMA's Statement of Ethical Professional Practice, what specific actions should Kimbell take to resolve her ethical conflict? Amy Kimbell was recently hired as an accounting manager for Hi-Quality Productions Inc., a publicly-held company producing components for the automotive industry. One division, Alpha, uses a highly automated process that had been outsourced for a number of years because the capital investment required was high and the technology was constantly changing. Two years ago, the company decided to make the necessary capital investment and bring the operation in house. Since all major capital investments must be approved by the Board of Directors, the budget committee for the Alpha Division recommended the $4 million investment to the Board, projecting a significant cost savings. In her new job as accounting manager, Kimbell is on the budget committee for the Alpha Division. The Board has requested from the committee a post-audit review of the actual cost savings. While working on the review, Kimball noted that several of the projections in the original proposal were very aggressive, including an unusually high salvage value and an excessively long useful life. If more realistic projections had been used, Kimbell doubts that the Board would have approved the investment. When Kimbell expressed her concerns at the next meeting of Alpha's budget committee. she was told that it had been the unanimous decision of the committee to recommend the investment because it was thought to be in the best long-term interest of the company. According to the committee members, the post-audit report would not discuss these issues; the committee members believe that certain adjustments to the review are justified to ensure the success of the Alpha division and the company as a whole. REQUIRED: A. B. Using the categories outlined in IMA's Statement of Ethical Professional Practice. identify the standards that are specifically relevant to Kimbell's ethical conflict and explain why the identified standards are applicable to the situation. According to IMA's Statement of Ethical Professional Practice, what specific actions should Kimbell take to resolve her ethical conflict?
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A Relevant Standards from IMAs Statement of Ethical Professional Practice 1 Competence Kimbell should possess the necessary skills and knowledge to ev... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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