Ryan and Kim are married and commute to and from work together each day. Ryan, a CPA, works in the Project Budgeting Department of Carson Company, and his wife, Kim, works as an engineer in the company’s Research and Development Department. Kim loves new challenges and cutting-edge technology. She really is hoping to get a new, state-of-the-art Tommy-Jaden machine for her laboratory, but she recognizes that this machine is extremely expensive, and its benefits are difficult to quantify. Carson Company evaluates project proposals, including the pending proposal to buy a new Tommy-Jaden machine, by using a standard net present value approach. Ryan despises people who “cook books” and bias projections, and he never would do so.
a. Does Ryan have a conflict of interest? Explain?
b. Does Ryan have a duty to make any disclosures to his supervisor? Explain?
c. How could Ryan alter his projections to maximize the odds of the company giving “green- light” approval to this capital expenditure? Expain?