Ethics in ActionThe director of marketing for Starr Computer Co., Megan Hewitt, hadthe following discussion with the company controller. Cam Morley, onJuly 26 of the current year: Megan: Cam, it looks like I'm going to spend much less than indicated onmy July budget.Cam: I'm glad to hear it. Megan: Well. I'm not so sure it's good news. I'm concerned that thepresident will see that I'm under budget and reduce my budget in thefuture. The only reason I look good is because we delayed an advertising campaign. Once the campaign hits in September, I'm sure my actualexpenditures will go up. You see, we are also having our sales conventionin September. Having the advertising campaign and the convention atthe same time is going to kill my September numbers. Cam: I don't think that's anything to worry about. We all expect somevariation in actual spending month to month. What's really important isstaying within the budgeted targets for the year. Does that look as if it'sgoing to be a problem? Megan: I don't think so, but just the same. I'd like to be on the safe side.Cam: What do you mean?Megan: Well, this is what I'd like to do. I want to pay the convention- related costs in advance this month. I'll pay the hotel for room andconvention space and purchase the airline tickets in advance. In thisway, I can charge all these expenditures to July's budget. This wouldcause my actual expenses to come close to budget for July. Moreover,when the big advertising campaign hits in September. I won't have to worry about expenditures for the convention on my September budget.The convention costs will already be paid. Thus, my September expensesshould be pretty dose to budget.Cam: I can't tell you when to make your convention purchases, but I'mnot too sure it should be expensed on July's budget. Megan: What's the problem? It looks like "no harm, no foul" to me. I can'tsee that there's anything wrong with this-it's just smart management.How should Cam Morley respond to Megan Hewitt's request to expensethe advanced payments for convention-related costs against July'sbudget?
Ethics in Action
The director of marketing for Starr Computer Co., Megan Hewitt, had
the following discussion with the company controller. Cam Morley, on
July 26 of the current year:
Megan: Cam, it looks like I'm going to spend much less than indicated on
my July budget.
Cam: I'm glad to hear it.
Megan: Well. I'm not so sure it's good news. I'm concerned that the
president will see that I'm under budget and reduce my budget in the
future. The only reason I look good is because we delayed an advertising
campaign. Once the campaign hits in September, I'm sure my actual
expenditures will go up. You see, we are also having our sales convention
in September. Having the advertising campaign and the convention at
the same time is going to kill my September numbers.
Cam: I don't think that's anything to worry about. We all expect some
variation in actual spending month to month. What's really important is
staying within the budgeted targets for the year. Does that look as if it's
going to be a problem?
Megan: I don't think so, but just the same. I'd like to be on the safe side.
Cam: What do you mean?
Megan: Well, this is what I'd like to do. I want to pay the convention-
related costs in advance this month. I'll pay the hotel for room and
convention space and purchase the airline tickets in advance. In this
way, I can charge all these expenditures to July's budget. This would
cause my actual expenses to come close to budget for July. Moreover,
when the big advertising campaign hits in September. I won't have to
worry about expenditures for the convention on my September budget.
The convention costs will already be paid. Thus, my September expenses
should be pretty dose to budget.
Cam: I can't tell you when to make your convention purchases, but I'm
not too sure it should be expensed on July's budget.
Megan: What's the problem? It looks like "no harm, no foul" to me. I can't
see that there's anything wrong with this-it's just smart management.
How should Cam Morley respond to Megan Hewitt's request to expense
the advanced payments for convention-related costs against July's
budget?
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