Lesson 11 - Course Project 1 - Essay Example

Atkins and Granger make liberal use of this budget-making technique when making sales and expense projections. Budgetary slacks alleviate the effects of deviations if they occur. A more shifty use of the technique is to make it easier for managers to achieve targets, especially where sales performance results in bonuses and appraisals (Stevens 1). Budgetary slacks in sales and expenditure projections can adversely affect the staff the projections relate. In the case of Atkins and Granger, altered projections can result in less motivation to achieve more in their areas of responsibility as they can alter the figures to give the impression that they are performing beyond the projections.

On another note, if the two staff can alter the financial figures at will, then there is serious risk of the pair falsifying account figures to serve selfish interests (Stevens 1). The Institute of Management Accountants (IMA) requires its members behave ethically, and in ways that are responsible, honest, fair, and objective (IMA 1). IMA categorically opposes the use of confidential information for unethical and illegal motives. Overall, management accountants should cultivate restraint in situations that pose conflicting interests.

IMA also requires that management accountants evade activities such as the budgetary slack that may jeopardize efficient execution of some activities. A budgetary slack presents amble opportunities for information asymmetry (Stevens 1). For instance, Granger cannot tell with certainty the actual sales figures because Atkins changes them before handing them over. On credibility, the IMA expects that management accountants disclose all relevant information that may influence the understanding, and use of the information (IMA 2).

Modification of sales figures by Atkins adversely affects the ability by Granger to predict closing inventory levels, which is clearly unethical. In addition, Atkins