Background of the Case and Ethical Issues
In this case, Karin Morgan, who is a Controller at Kappa Co, must decide about the suitable, for her company, space to rent. She considers two distinct alternatives, and the cheapest of which complies with all the requirements but is owned by Karin’s uncle. The other option is more expensive but is similar to the property that the company already has. There are ethical issues with respect to the decision, which shall be discussed first to outline what place should be chosen.
With respect to the IMA Standards of Ethical Conduct for Management Accountants, it is possible to consider the compliance of Karin’s conduct, in this case, with the four components of the concept provided. Competence implies knowledge and skills utilizing and professional duties performing, while confidentiality means refraining from confidential information disclosing. Integrity provision states the necessity to avoid conflicts of interest, refuse any hospitality and can influence the decision-making, and communicate any information and professional judgments, while objectivity implies communicating information fairly and objectively. In this situation, confidentiality is not violated, although there is an issue with competence, integrity, and objectivity.
There is a conflict of the company’s interest with Karin’s uncle’s one, who can potentially obtain a financial benefit. Therefore, the Controller’s professional qualities, such as rationality, can be affected by the perspective of hospitality that would be provided if she chose the first option (“IMA Statement of Ethical Professional Practice”).
The situation questions her competence, as it is complicated to utilize knowledge, skills, and perform professional duties while the attractiveness of non-conformance with Standards of Ethical Conduct for Management Accountants’ provisions is indisputable. In the matter of objectivity, Karin may need to withhold the relevant information to sign a lease for Kappa Co, in the event of choosing the first option (“IMA Statement of Ethical Professional Practice.” Therefore, there is an ethical issue with respect to competence, integrity, and objectivity that shall be considered to ensure that the final decision is beneficial for the company.
Recommendations
It is possible to give Karin advice about the decision she has to make. Although there is an apparent ethical issue in the case, as explained above, it does not imply that choosing the second option and signing the lease for Kappa Co with it is the right approach. It is vital to know about its attitude toward expenditures in the current period, to reveal what offer from two is more suitable for the company. The cheapest, as well as the most expensive options, may not be the optimal ones. Therefore, the consideration of what is more significant for the company, saving of money or the convenience is a due.
If there is a necessity to rent the most affordable option, among those that meet the company’s needs and requirements, choosing the first place that belongs to Karin’s uncle is the right decision. The competency of the Controller cannot be questioned, in this situation, as the choice satisfies the firm’s necessities, while the second option does not. In the event the amount of money that shall be spent on rent is not strict, choosing the second, more convenient option is the right decision.
In this situation, the requirements of the company will be met as well, while no ethical issues influence the choice. Therefore, despite the presence of violations of Standards of Ethical Conduct for Management Accountants, it is still possible to make the most optimal decision based on the company’s needs. There shall be no hesitations related to the ethical issues, as basically, it is the Kappa Co requirements that define what option should be chosen.
Works Cited
“IMA Statement of Ethical Professional Practice.” Imanet. 2017. Web.