Case_A Faulty Budget
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Transcript of Case_A Faulty Budget
8/11/2019 Case_A Faulty Budget
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CASE 1-8
A FAULTY BUDGET
BAES. BONDOC. CHAN. MELCHOR. QUE. SALAYSAY. SEE
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Ethical Issue
Whether or not to report to Pete
the mistake with the budget
Daniels projected twice the
level of sales for that productthat will likely to occur.
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Factual Information
Jackson Daniels graduated
from Lynchberg State College
two years ago
He works in the accounting
department of LynchbergManufacturing
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Factual Information
Daniels prepared the
sales budget for 2011.
He projected sales of
250,000 units of product,25% increase over 2010.
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Factual Information
Pete is responsible for hiringadditional workers to produce the
soaking tanks.
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Stakeholders & Obligation
Employees and the community
Possible for them to lose their jobs
Stockholders and creditorsMight lose actual dollars and suffer losses
SupervisorObligation to create an environmentwhere employees will admit mistakes,sooner rather than later
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All Possible Alternative
Alternative 1Do nothingIgnore and follow
Walker’s advice towait and see whathappens next(demand).
Alternative 2Report to Pete when
the demand
does notincrease
beyond the
correctprojected level
Alternative 3Report to Pete the
mistake in thebudget
immediately
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All Possible Alternative
Alternative 1Do nothingIgnore and follow Walker’s advice to waitand see what happens next (demand).
If the demand does not meet sales projection
then make excuses like the demand cannot be
measured accurately and changed over time.
Philosophy involved:
Egoism - Morally wrong because
it excludes others
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All Possible Alternative
Alternative 2Report to Pete when the demand does not
increase beyond the correct projected level
Philosophy involved:
Categorical Deontologist: Act in a manner
that you could be prepared to have anyoneelse in a similar situation act in a similar way
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All Possible Alternative
Alternative 3Report to Pete the mistake in the budget
immediately
• Immediately tell his supervisor so that the supervisorwill not be surprised and the damage will belessened. All employees, especially those who aremaking projections which may impact the future of
the company must act with integrity.• Coordinate with Pete and reduce the hiring and
materials being produced.
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All Possible Alternative
Alternative 3Report to Pete the mistake in the budget
immediately
Philosophy involved:
Categorical Deontologist: Act in a manner
that you could be prepared to have anyoneelse in a similar situation act in a similar way
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Course of Action
• Should not act in personal interest but also for the
welfare of others.• Error discovered by an employee must be
reported as soon as possible with no doubts andhesitations.
“Integrity is a fundamental trait of character thatenables a CPA to withstand client and competitive
pressures that might otherwise lead to thesubordination of judgment.”
- Mintz
Alternative 3Report to Pete the mistake in the budget immediately