264. CSO: 1E1a LOS: 1E1c
Recently Fan Club Inc. submitted a budget for the coming year to management. Included
in the budget were the plans for a new product, a rechargeable fan. The new fan will not
only last longer than the competitor’s product but is also more quiet. While not yet
approved, the budget called for aggressive advertising to support its sales targets, as the
business community was not yet aware that Fan Club was close to production of a new
fan. A member of the management accounting staff “shared” the budget with a
distributor. In accordance with IMA’s “Statement of Ethical Professional Practice,”
which one of the following would best represent an ethical conflict in this situation?
a. The budget has not been approved and therefore is not for publication.
b. The price has not been established, so expectations must be managed.
c. The staff member exposed the company to a potential lawsuit.
d. The employee should refrain from disclosing confidential information.
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CMA Part 1 – Financial Planning, Performance and Control
Answers to Examination Practice Questions
Section A: Planning, Budgeting and Forecasting
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