Question

Daisy Inc., a manufacturing company, is planning to invest in new equipment. Thomas, the cost accounting manager, was in favor as the investment had seemed profitable by his calculations. Later, he realized that some of the assumptions made were impractical and made the investment not as profitable as he had thought. He refrained from disclosing this information to management. In this scenario, which of the following ethical behavior principles was violated by Thomas?

a.Independence
b.Confidentiality
c.Objectivity
d.Credibility

Answer 1

Thomas, the cost accounting manager, violated the ethical principle of credibility by not disclosing that his initial assumptions were impractical and could affect the investment's profitability.

Step-by-step explanation:

In the given scenario, Thomas, the cost accounting manager of Daisy Inc., has violated the ethical principle of credibility. Credibility in the professional field of accounting and business includes, among other things, providing all relevant information that could influence a user's understanding or decision. By realizing that his initial assumptions were impractical and choosing not to disclose this vital information to the management, Thomas compromised the credibility of his analysis. Ethical behavior requires that all relevant and material information is communicated transparently, allowing for informed decision-making.