Im the DARIUS ENTERPRISES

Sales Manager

Executive Summary:
REMODEL = P250,000

SUCCESSFUL
However, Darius has a policy that
individual expenditures in excess of
P200, 000 must be approved by the
firms BOD.
Franklin, unfortunately, missed
the deadline to have the board
consider this project at its regular
September meeting.
He subdivided the project in two
parts-construction and
decorating (190,000) and
equipment purchases (60,000)-

Executive Summary:
1. Would Franklins approach of subdividing the
project in two parts have any effect on the companys
financial statements?

2. Did Franklin behave in an ethical manner?

3. Which, if any, of the following standards of conduct

would have applicability to Franklins conduct:
competence, confidentiality, integrity, or credibility?
Briefly explain.

Problem Statement:
1. It doesnt have any effect on the companys financial statements.

Although some extra processing is

involved because of the "separate"
projects, the same total costs will
be incurred for the same assets.

Discussion of Alternatives:
2. UNETHICAL
He subdivided the plan in two parts but
its expenditures comprises of
construction costs, decorating and
equipment purchases are considered
into one project thus their accounting
treatment indicates in a different way
therefor Franklin behaved in an
unethical manner.

Discussion of Alternatives:
3. Integrity and Credibility.

Integrity- managers must be honest, fair and

objective in all professional and business
relationship and therefor they must avoid any
performance which deals with prejudice of the
ethical performance of duties and
responsibilities.

Discussion of Alternatives:
3. Integrity and Credibility.
Credibility - concerns with disclosing all relevant
information that could reasonably be expected to
influence an intended user's understanding of the
reports, analysis, or recommendations; disclosing
delays or deficiencies in information, timeliness,
processing, or internal controls in conformance with
organization policy and/or applicable law and
communicating information fairly and objectively.

Managers credibility will also build an effective

relationship based on trust and respect in bringing
deadlines and attaining outcomes.

Discussion of Alternatives:
1. Franklin, sales manager, wouldnt have missed the
deadline of the approval of projects by the board

2. He must have wait the next approval meeting so that

bypassing the companys policy wouldnt be an issue.

3. Disclosing all relevant information that could

reasonably be expected to influence the user's
understanding

Recommendation: