Certified Management Accountant Professional Ethics 3 — Questions and Answers
Question 1: A CMA is asked by her CFO to prepare forecasts using assumptions she believes are unreasonably optimistic. Which ethical principle is MOST directly at stake?
- Confidentiality
- Credibility (Correct answer)
- Competence
- Commitment
Correct answer: Credibility
Credibility requires CMAs to communicate information fairly and objectively; preparing forecasts with knowingly unrealistic assumptions violates this principle.
Question 2: Under the IMA ethical standards, which of the following activities would be considered a violation of confidentiality?
- Testifying under subpoena about company financials
- Sharing proprietary cost data with a former colleague who now works for a competitor (Correct answer)
- Discussing internal audit findings with the company's external auditors
- Reporting fraud to the company's audit committee
Correct answer: Sharing proprietary cost data with a former colleague who now works for a competitor
Sharing proprietary data with a competitor via a former colleague breaches the confidentiality obligation, which survives employment changes.
Question 3: The IMA's ethical conflict resolution guidance suggests that if a CMA's supervisor is involved in the unethical conduct, the CMA should next approach:
- The IMA Ethics Hotline directly
- The next higher managerial level or the audit committee (Correct answer)
- The company's largest shareholder
- The financial press
Correct answer: The next higher managerial level or the audit committee
When the immediate supervisor is implicated, the CMA should escalate to the next higher level of management or the audit committee.
Question 4: A CMA working in cost accounting discovers evidence of environmental violations. Under IMA standards, this situation is BEST addressed by:
- Ignoring it because it is outside the scope of accounting
- Reporting to the immediate supervisor or appropriate internal channel (Correct answer)
- Immediately reporting to the EPA without internal escalation
- Deleting the evidence to protect the company
Correct answer: Reporting to the immediate supervisor or appropriate internal channel
IMA standards require reporting ethical violations through appropriate internal channels before considering external reporting.
Question 5: Which of the following BEST describes 'pressure to compromise ethics' that the IMA Statement addresses?
- Management asking employees to study for the CMA exam on company time
- Management directing an accountant to misrepresent financial results (Correct answer)
- Requiring overtime during financial close periods
- Asking a CMA to prepare a budget under tight deadlines
Correct answer: Management directing an accountant to misrepresent financial results
Pressure to misrepresent financial results is a classic ethical conflict the IMA Statement addresses, requiring the CMA to refuse and escalate.
Question 6: A CMA serves on the board of a nonprofit organization that is also a vendor to her employer. This arrangement should PRIMARILY be handled by:
- Resignation from the nonprofit board immediately
- Full disclosure to her employer and recusal from related decisions (Correct answer)
- Keeping it private as long as no money personally changes hands
- Seeking an IMA opinion letter before continuing
Correct answer: Full disclosure to her employer and recusal from related decisions
Integrity requires disclosure of all conflicts of interest and recusal from decisions where a conflict exists.
Question 7: The IMA provides an Ethics Hotline primarily to:
- Certify that companies comply with GAAP
- Offer guidance to members facing ethical dilemmas in a confidential manner (Correct answer)
- File complaints against CMA certificate holders with state boards
- Audit member companies for ethical compliance
Correct answer: Offer guidance to members facing ethical dilemmas in a confidential manner
The IMA Ethics Hotline offers confidential guidance to members who need help navigating ethical situations in their professional lives.
Certified Management Accountant Professional Ethics 3
A CMA is asked by her CFO to prepare forecasts using assumptions she believes are unreasonably optimistic.
Which ethical principle is MOST directly at stake?