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The overarching principles of the IMA Statement of Ethical Professional Practice are Honesty, Fairness,
Objectivity, and Responsibility. The statement’s corresponding “Standards for Ethical Conduct…” require
management accountants to
 Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
 Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
 Communicate information fairly and objectively.
 Inform all relevant parties regarding appropriate use of confidential information.
Several of the suggestions made by Chang’s staff are clearly in conflict with the statement’s principles
and required standards and should be viewed as unacceptable.
a. Pay local officials in Indonesia to certify the ramin used by CI as sustainable. It is not certain
whether the ramin would be sustainable or not. Put highly visible tags on each piece of furniture to
inform consumers of the change. It violates the standard of competence and credibility. This tactic will
not follow the professional duties in accordance with relevant law and regulations as well as disclosing
information to the user.
d. Pressure current customers to take early delivery of goods before the end of the year so that more
revenue can be reported on this year’s financial statements. This strategy would violate the IMA’s
standards of credibility and integrity. The financial statement of the company would show an
overstated revenue which is against communicating information fairly and objectively to the
investors and advising all the parties of potential conflict.
c. Record the executive year-end bonus compensation for the current year in the next year when it is
paid until after the December fiscal year-end. This violates IMA’s standards of credibility and integrity.
The financial statements shall use the accrual method thus the year end bonus of compensation should
be recorded as an expense for the current year.
i. Recognize sales revenues on orders received but not shipped as of the end of the year. This would be
a violation of the IMA’s standards of credibility and integrity and may be considered fraudulent. It is true
that accrual method shall be used in preparing the Financial statements however, if the goods are not
been prepared nor shipped as of the end of the year the said revenue should be recorded next year. If
sales are recognized in this way, the revenue will be overstated.
The other “year-end” actions occur in many organizations and fall into the “gray” to “acceptable” area.
Much depends on the circumstances surrounding each one, however, such as the following:
a. Stop all transatlantic shipping efforts. The start-up costs for the new operations are hurting current
profit margins. While this method may result in better short-term financial results for Andahl, it may do
harm to the long-term financial condition of the corporation as a whole.
b. Make deep cuts in pricing through the end of the year to generate additional revenue. This does not
violate any of the IMA’s standard if this will be used for short term only. This follows the standard of
being competent.
h. Sell-off distribution equipment prior to year-end. The sale would result in one-time gains that could
offset the company’s lagging profits. The owned equipment could be replaced with leased equipment
at a lower cost in the current year. This does not violate the IMA’s code of ethical standards however
this is a one-time gain and will only have short-term effect. With this, CI should consider having long
term strategies to address the issue.
g. Begin purchasing sustainable North American hardwoods and sell the Indonesian lumber subsidiary.
Initiate a “plant a tree” marketing program, by which the company will plant a tree for every piece of
furniture sold. Material costs would increase 25%, and prices would be passed along to customers.
This does not violate any of the standards however CI should consider the factor of having 25% increase
in material costs. If the prices will be passed to customers, the product will be pricy and result to lower
revenues.
d. Reject the change in materials. Counter the bad publicity with an aggressive ad campaign showing the
consumer products as “made in the USA,” since manufacturing takes place in North Carolina. It does
not violate the IMA’s standard as the product is truly manufactured in USA however, this will also result
to not sustainable products.
e. Redesign upholstered furniture to replace ramin contained inside the less expensive recycled
plastic. The change in materials would not affect the appearance or durability of the furniture.
The company would market the furniture as “sustainable” This does not violate the IMA’s
standard yet it strengthens the integrity and credibility of CI.
e. Pay local officials in Indonesia to certify the ramin used by CI as sustainable. It is not certain
whether the ramin would be sustainable or not. Put highly visible tags on each peace of furniture
to inform consumers of the change.
f. Make deep cuts in pricing through the end of the year to generate additional revenue.
g. Record executive year-end bonus compensation accrued for the current year when it is paid in
the next year after the December fiscal year-end.
h. Reject the change in materials. Counter the bad publicity with an aggressive ad campaign
showing the consumer products as “made in the USA,” since manufacturing takes place in North
Carolina.
i. Redesign upholstered furniture to replace ramin contained inside the less expensive recycled
plastic. The change in materials would not affect the appearance or durability of the furniture.
The company would market the furniture as “sustainable”
j. Pressure current customers to take early delivery of goods before the end of the year so that
more revenue can be reported in this year’s financial statement.
k. Begin purchasing sustainable North American hardwoods and sell the Indonesian lumber
subsidiary. Initiate a “plant a tree” marketing program, by which the company will plant a tree
for every piece of furniture sold. Material costs would increase 25%, and prices would be passed
along to customers.
l. Sell off production equipment prior to year-end. The sale would result in one-time gains that
could offset the company’s lagging profits. The owned equipment could be replaced with leased
equipment at a lower cost in the current year.
m. Recognize sales revenues on orders received but not shipped as of the end of the year.

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The overarching principles of the IMA Statement of Ethical Professional Practice are Honesty, Fairness,

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