Certified Management Accountants must at all times adhere to strict professional code of conduct in carrying out their day to day managerial activities. The Institute of Management Accountants has put in place very straight forward code of ethics and the necessary ways of resolving any conflicts arising thereof. There is therefore no reason for conducting business contrary to these codes of ethics since any challenges encountered have a clear resolution framework unless a member has fraudulent intentions in the conduct of organizational activities.

Computation of Breeland Ltd’s special order.

Abby did not correctly compute the order in question. It is Ace Fertilizer’s policy that special orders are billed at 80% over the cost of the order unless there is specific authorization from the Chief Executive Officer, Tom Brennen. Without obtaining authorization, Abby billed Breeland at 120% of the order cost (see appendix 1). The company equally prorates depreciation, routine maintenance and electricity costs related to these special orders as direct costs, these have been left out in Abby’s computation of the special order price against company policy. There is therefore need for a review of her computation prior to Josh’s interest in the remaining 10 gallons of XO- 1600 to enable corrections of errors that are clearly visible. Her assessment of the cost is however much more correct than George’s in as much as it has the incorrect markup that is not in line with the company policy. It has factored all the relevant costs necessary during the production of this special order. George on the other hand is advocating for the inclusion of costs that will not be incurred given that his brother is now interested in the remainder of XO 1600 after the manufacture of Breeland Ltd’s order like the actual cost of obtaining the remaining 10 gallons and disposal related costs. George’s Monday conversation with Abby should definitely impact her previous week cost estimates and she should review these estimates to Breeland Ltd taking into account that the previously included costs of the remaining 10 gallons and its disposal costs will now not be incurred. This development will as a result impact the organization sustaining level activity cost and the overall order cost (see appendix 1). Several ethical issues arise from the determination of Breeland Ltd’s order cost and there is need have them comprehensively addressed. These ethical issues include:

Competence Abby marked the cost up at 120% of cost instead of the company policy’s laid down 80%. This could be as a result of miscomputation or any other reason but the bottom-line is that upon verification by Breeland Ltd’s verification, it will clearly come out that this error, be it malicious or innocent has increased the margin from $ 600,000 to $ 900,000, a difference of $ 300,000. This goes against the IMA’s competence code of ethics which among other things states that a management accountant should prepare information and recommendations supporting decisions that are accurate, concise, timely and clear. To resolve this unethical conduct, Abby should be urged to countercheck her work and even enlist the services of a third party to help verify her computations. There should be two levels of checking cost estimations that include Abby’s level and another that involve a competent management accountant to help sieve these mistakes.

Integrity The IMA clears states in their code of ethics that a members must at all times distance themselves  from engaging in any conduct that would compromise carrying out duties ethically. By including costs that are not actually incurred in Breeland Ltd’s order such as the 10 gallons of XO 1600 that is to be sold to Josh and its disposal costs in the order cost to Breeland as suggested by George, Abby will be in total contravention of this code of ethics. She should not pay attention to this advice for whatever reason including the company bottom-line as suggested by George. As a certified management accountant, she should explain to George that this is against her professional code of ethics and he fails to understand and cooperate after their discussion, it is only appropriate that she takes the matter with Tom Bremen, the company CEO for advice. Credibility The credibility clause in IMA’s code of ethics states that a member should among other things, communicate information fairly and objectively and to disclose all neccessary information that could reasonably be anticipated to influence the end user’s understanding of reports analysis and recommendations. Failure to let Breeland Ltd know that the remaining 10 gallons of XO – 1600 will be sold to another user and therefore will not form part of total cost is very crucial to decision making on Breeland’s side and will as a result lead to breach to this specific code of ethics. Abby should stick to her professional code of ethics and disclose all the relevant information with regards to Breeland’s order taking into account the new weekend development from Josh following his interest on the remainder of XO – 1600. Any conflict arising between her and George as a result of this strict adherence to professional code of ethics should then be drawn to the attention of the CEO, Tom Bremen.

Confidentiality Confidentiality clause was broken by George when he chose to discuss the dealing between Ace Fertilizer with his brothers at their grandmother’s birth day party, but since he is not a certified management accountant, he is not bound by IMA’s code of conduct. Abby should however explain it him that it against management accountant’s code of ethics not to keep information confidential, except in circumstances when disclosure is authorized or legally required and as a member of the managerial department, he should respect this code of conduct in as much as he is not a member of IMA. If in future it turns out that he has discussed Ace Fertilizer’s business dealings with his family or any other person, then Abby should take it upon herself to take the issue up with Tom Bremen who will then advice on the next course of action against George’s conduct.


 Abby should respect her professional ethics and always conduct herself with strict reference and adherence to the said ethics when carrying out Ace Fertilizer’s business. As a member of the Institute of Management Accountants, she should be the institute’s ambassador by encouraging her management colleagues to respect these ethics and embrace good managerial practices. These ethics go a long way in improving the image of an organization among peers and partners and should always be followed, even incorporated an organizations internal code of ethics to encourage good business practices. The drive to achieve short or long term organizational objectives should never be a reason for flouting professional ethics. A member of any professional body, the IMA included have very clear knowledge of the consequences that come with failure to follow the laid down professional codes of conduct that among others include expulsion from the body and subsequent withdrawal  of  practicing certificates. Being a young professional, Abby should not let George’s drive to get to Ace Fertilizer’s short term goals ruin her thriving career in the organization. Modified cost estimate for Breeland Ltd’s order after taking into account Josh’s purchase do not adversely impact on Ace fertilizers bottom-line as seen in apendix 2. The expected profit given the required mark up is not sliced. Ace Fertlizer will still make 80% on total cost from the two orders. In as much as the new profit figure looks low, it is rightfully what the organization should make if Breeland and Josh are correctly billed.