Good Intentions at Good Grains, Inc.
32 Pages Posted: 18 Aug 2010 Last revised: 12 Jul 2012
Date Written: August 16, 2010
Abstract
In the case, David Johnson is cast as a young professional, someone happy to have found a full-time position with great career prospects during difficult economic times. The reader meets David when he is still new in his job and flattered that his boss, Good Grains’ Controller Rebecca Carey, has asked him to find a way to allow additional dollars above and beyond those originally budgeted to be used to continue the company’s R&D efforts to reformulate its breakfast cereals. David has an emotional attachment to the company and would like to see it succeed in its R&D efforts. As a result of Rebecca’s request and his belief in the product, David is happy to explore ways to allow the R&D spending to increase, even if that means amounts that would have been reported as R&D expenses in the past are now reclassified as cost of goods sold (COGS). Each of the reclassification's was approved by the accounting group. Similar to many young professionals, David lacks any prior exposure to the IMA’s Statement of Ethical Professional Practice (Statement) (IMA 2005) and relies on the advice and support of his fellow employees who should be familiar with the accounting policies of the company and the Statement. Readers of the case should find themselves pondering if David’s actions are in accordance with or contrary to U.S. generally accepted accounting principles and the ethical conduct expected by the Statement. Managerial accounting and MBA students who tested the case report indicated they could relate to David’s dilemma, and that it enhanced their knowledge of accounting and ethics.
Keywords: ethics, financial reporting, budgets, reclassifications
JEL Classification: M41
Suggested Citation: Suggested Citation
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