Budgeting and Planning Case Review Memo: Accounting Ethics Guide

MEMORUNDUM

TO:

FROM:

DATE: June 23, 2025

RE: Budgeting and Planning Case Review

In reference to the Budget and Planning case, I believe that Max Green cares about the level of budget net income because it has the potential to impact his bonus remuneration whereby as the regional director, he will be eligible for bonus compensation if the income levels are achieved. Therefore, his primary intentions are to keep the budget net income at a lower figure which is easier to achieve, hence the reason he provided me with instructions to make several adjustments to the budget net income. Based on the instructions provided by Green, reducing the budget net income of $250,000 is an excellent strategy to ensure the achievement of a lower budget net income figure, since there are more chances that the actual net income would be more than the budget net income, making it possible for him to earn the bonus. Additionally, Greens’ concerns regarding the level of budget net income can also be attributed to his belief that I may opt for a higher-level budget net income because my wife would benefit from this move since she is in line to become an owner of one of the new franchised stores to be launched next year. Adding to the reasons he wants the budget net income adjusted to make it more attainable (Jiambalvo, 2019).

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Since there is no indication that you expected budgetary padding to take place, I believe that this revelation may come as a surprise. I also believe it will be a shock, as well as disappointing to learn that some of your employees are using such strategies to benefit themselves.

I would like to point out that there is very little for me to benefit from these actions. The only benefit is that I will be able to stay in Green’s good graces and hence avoid any retaliatory actions such as those delivered to people who do not adhere to his directives. Additionally, staying in his good graces may also benefit my wife who as I noted, intends to open a new franchise store next year. On the other hand, I have a lot to lose from these actions. To begin with, falsifying information will seriously compromise my personal integrity (Seebacher, 2020). Additionally, if I undertake the task, it will make it easier for Green to request even more falsification of information in the future hence spiraling into a large issue of manipulations and falsification. If these actions come to light, I will definitely lose my job, which will also compromise my ability to gain future employment in the field of accounting.

I am bound to abide by the IMA’s Statement of Ethical Professional Practice as a certified management accountant. I have a responsibility to ethically practice my skills in the field of accounting by ensuring I offer accurate information (Jiambalvo, 2019). Additionally, it is my responsibility to disclose all relevant information to ensure effective decision-making. I am responsible for ensuring that I do not use my accounting skills to deceive others. Therefore, based on these actions I have violated the Statements of standards. I have knowingly provided false information in the budget, therefore, violating the competence standard. The standard required that any information I provided is accurate; therefore, I have violated the integrity standard by participating in activities that may discredit the accounting profession (Jiambalvo, 2019). Additionally, I have violated the field’s credibility standard by failing to disclose all relevant information.

References

Jiambalvo, J. (2019). Managerial accounting. John Wiley & Sons.

Seebacher, U. G. (2020). Template-based management: A guide for an efficient and impactful professional practice. Springer Nature.