Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 32

Identifying Unethical Actions (Appendix)

The managers of Quince Products (Problem 1-31) decide they will hire a management accountant to help them analyze the decision to expand their product line. They solicit bids from various accountants in the city and receive three proposals. In describing their qualifications for the job, the three state:

Accountant A: “I have recently advised the symphony on how to raise money and therefore I know the local area well.”

Accountant B: “I have advised several small firms on expansion plans.”

Accountant C: “I have advised Pear Company [Quince’s main competitor] and can share its experi­ences and insights with you.”

All of the proposals have the same price.

Required

a. As the accounting manager of Quince Products, prepare a memo recommending which ac­countant you would prefer to retain. Be sure to include your reasons.

---

b. Which, if any, of the accountants making a proposal are violating the IMA’s code of ethics? What is (are) the violation(s)?

Step 1 of 2

a.?We recommend that Accountant B be retained to help Quince Products with their expansion plans. Accountant B has experience with small companies and growth. Although Accountant A has experience in the local area, the experience is with not-for-profit firms and, therefore, might not be particularly applicable. We would not retain Accountant C because he or she is willing to share information from another company’s experience. Therefore, he or she might be willing to divulge our information to another competitor.