Question - The controller of one division of a large diversified firm is compensated with salary plus a bonus. The bonus is a significant part of her total compensation, and is based directly on the profits of the division. Thus, the controller has an incentive to find ways to increase profits, including the delay of sales promotions, delay of maintenance and repair of equipment, and delay of discretionary expenses such as research and development.
Required: Discuss whether the ways described above to increase profits are ethical. Why or why not? Which ethical standards for managerial accountants are involved? How should she be guided by those standards in this case?