Managerial accounting is based on obtaining and using information for internal use, to make decisions with real time info and focus on future outcomes. According to the IMA, the principles of managerial accountants are honesty, fairness, objectivity, and responsibility. Honesty plays a primary role in the ethical behavior of the organization, especially with managerial accounting because the accounting numbers are at the center of the financials that drive all business decisions. Without honesty, the numbers would not be accurate, leading to either covert calculations or lying to stakeholders. Fairness is important because all team members need to have a consistent system that applies fair oversight and punishment if necessary. And, when decisions are made objectively, it removes the chances to impartial or slanted decisions based on personal relationships or subjectivity. All members need to be responsible for their individual role in order for the organization to function optimally.
In this case study, there are several stakeholders to consider. First, Ray is a stakeholder, but his position does not represent the greater good of the company, it’s personal survival. And, his team working on the Super-cut model are in a similar role as Ray. The rest of the company is also a stakeholder as an organization, they would likely be negatively impacted if Marcus makes his decision based on Ray’s request. Marcus can positively affect the company by giving objective analysis. In addition, customers are stakeholders, and will be affected by Marcus’s decision, perhaps benefiting from Marcus’s decision to terminate the super-cut line. Investors in the company are stakeholders and will be affected negatively if Marcus does not report real numbers that represent accurate and transparent analysis.

Marcus has several important ethical obligations to his company. I think Marcus’s ethical obligations are consistent with both the company and his friend. By being honest and objective, even if that means terminating the supercut-line and ending Ray’s employeement, Marcus is serving both parties with loyalty. If the were to submit a report that was tainted based on Ray’s request, then he would be doing the company, Ray and himself harm. Perhaps Ray would not be fired, or he would find a better job elsewhere.

According to the IMA Statement of Ethical Professional Practice, Marcus would violate several standards if he were to go along with his friend Ray’s request. First, Marcus would violate the competence standard, because his judgement would be not be responsible. And, Marcus would violate confidentiality given his knowledge regarding Ray was used to make an unethical decision. He would definitely violate integrity, there is a clear conflict of interest. Finally, his credibility would be violated by not reporting info accurately and not communicating objectively.

There are some possibilities for Marcus to help both his friend Ray and uphold the ethical obligations to his company. Marcus could look deeper into the numbers to determine if the super-cut line has a long term positive gain for the company. For example, he may want to analyze the current supplier of parts to determine if other suppliers would be willing to bid a lower sourcing price. Or, they may need to address why the units are note selling by conductin a survey to customers and understand what they perceive. It may be a simple solution in the marketing that resolves the problem. Perhaps there are ways to reduce costs that Ray can advise regarding the production line. In fact, if Ray were to look at this problem as a challenge, as an opportunity to resolve a company problem, he could be a hero to the organization. Ray may find that the supercut line does need to be terminated, but he could find a place in the other sections to help them with more effective production techniques.