Chapter 1, Problem 49IC

Before Miller Cereals can introduce the new cereal, the board of directors has to give their approval. The marketing manager really wants to introduce the new product and believes (honestly) that it will be profitable and an important next step in the firm’s evolution. However, she knows that with the forecasted profit, the board will not give their approval.

She asks the management accountant what she can do. He tells her that he has reviewed the numbers generated by the intern and he thinks they are reasonable. However, he tells her that “other” costs consist of many different things, so it would be difficult to question a lower number. He suggests that he lower the estimated other costs by an amount sufficient to get board approval.

Required

Is the management accountant violating the IMA’s code of ethics? If so, what is (are) the violation(s)?