Reference no: EM132064586

Question - Assume you are the Controller for Welsh, Co. Every quarter you prepare a cost report. The most recent cost report shows a significant decrease in maintenance, training, and quality review costs. You share your concerns with Nate Lester, the Divisional VP. Nate tells you that the cost reductions are appropriate. You argue however that cutting these costs may compromise the operations of the machines, decrease employee productivity and introduce defective products into the market. You are concerned that the implications of the cost reductions are potentially far-reaching. You tell Nate that you want to highlight the cost reductions, so that corporate knows about these reductions. He tells you to present the report in its usual format, without any specific highlights.

Nate has an opportunity for a promotion as President of the company's foreign subsidiary. His promotion is contingent on a good performance review. If Nate is promoted, you are next in line for his position. If promoted, you would have full control over managing the company's costs.

Discuss the ethical implications of the above scenario. Below are questions that may help guide your discussion. The questions are a guide (a sentence or two answering each question is insufficient). You should provide a well-organized thoughtful discussion of the ethical situation.

What dilemma does the accountant face?

Who are the potential stakeholders and how might they be affected by the decision of the accountant?

What choices does the accountant have? Evaluate the choices, i.e. who benefits or who is hurt by the choice(s).

What action would you recommend? How would you respond to the boss?

What should the company do going forward?