Bonnie Morgen: First Day on the Job and Facing an Ethical Dilemma Case Author: Barbara Lamberton Online Pub Date: January 02, 2019 | Original Pub. Date: 2018 Subject: Financial Reporting, Business Ethics Level: Intermediate | Type: Experience case | Length: 1120 words Copyright: © 2018 IMA Educational Case Journal. All rights reserved. Organization: fictional/disguised | Organization size: Region: Global | State: Industry: Manufacturing Originally Published in: Lamberton, B. (2018). Bonnie Morgen: First day on the job and facing an ethical dilemma. IMA Education Case Journal, 11(1), Article 2. Publisher: Institute of Management Accountants DOI: http://dx.doi.org/10.4135/9781526490650 | Online ISBN: 9781526490650 javascript: void(0); javascript: void(0); javascript: void(0); javascript: void(0); http://dx.doi.org/10.4135/9781526490650 © 2018 IMA Educational Case Journal. All rights reserved. This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes. 2020 SAGE Publications Ltd. All Rights Reserved. This content may only be distributed for use within Colorado State Univ Global. http://dx.doi.org/10.4135/9781526490650 SAGE © 2018 IMA Educational Case Journal. All rights reserved. SAGE Business Cases Page 2 of 5 Bonnie Morgen: First Day on the Job and Facing an Ethical Dilemma http://dx.doi.org/10.4135/9781526490650 Abstract The case presents an accounting ethical dilemma where the controller of a business unit that produces and sells industrial components must decide what to do when her boss misrepresents orders as sales to meet sales budgets and thus overstates revenues by one and a half million dollars. Case Introduction Today is Bonnie Morgen’s first day on the job as controller of a business unit that produces and sells industrial components. She has been with the company for a number of years and most recently worked at headquar- ters, working directly for CFO Ed Judsen. Bonnie is replacing Jerry Mayfare, who recently left the company for another opportunity. Jerry’s previous work experience included 10 years of working at an entrepreneurial venture. Bonnie had heard that Jerry prided himself on not having a lot of formal accounting training. Starting today, Bonnie will work directly for Bill Ridgefield, the division general manager (GM), but she will still have responsibility to Ed. Although company policy dictates that both the GM and CFO have input in the con- troller’s performance evaluation, the GM’s input has greater weight for both the annual review and pay raises. Bill has a reputation as a personable and .

1. Bonnie Morgen: First Day on the Job and Facing an
Ethical Dilemma
Case
Author: Barbara Lamberton
Online Pub Date: January 02, 2019 | Original Pub. Date: 2018
Subject: Financial Reporting, Business Ethics
Level: Intermediate | Type: Experience case | Length: 1120
words
Copyright: © 2018 IMA Educational Case Journal. All rights
reserved.
Organization: fictional/disguised | Organization size:
Region: Global | State:
Industry: Manufacturing
Originally Published in:
Lamberton, B. (2018). Bonnie Morgen: First day on the job and
facing an ethical dilemma. IMA Education
Case Journal, 11(1), Article 2.
Publisher: Institute of Management Accountants
DOI: http://dx.doi.org/10.4135/9781526490650 | Online ISBN:
9781526490650
javascript: void(0);
javascript: void(0);
javascript: void(0);
javascript: void(0);
http://dx.doi.org/10.4135/9781526490650
© 2018 IMA Educational Case Journal. All rights reserved.

2. This case was prepared for inclusion in SAGE Business Cases
primarily as a basis for classroom discussion
or self-study, and is not meant to illustrate either effective or
ineffective management styles. Nothing herein
shall be deemed to be an endorsement of any kind. This case is
for scholarly, educational, or personal use
only within your university, and cannot be forwarded outside
the university or used for other commercial
purposes. 2020 SAGE Publications Ltd. All Rights Reserved.
This content may only be distributed for use within Colorado
State Univ Global.
http://dx.doi.org/10.4135/9781526490650
SAGE
© 2018 IMA Educational Case Journal. All rights reserved.
SAGE Business Cases
Page 2 of 5
Bonnie Morgen: First Day on the Job and Facing an Ethical
Dilemma
http://dx.doi.org/10.4135/9781526490650
Abstract
The case presents an accounting ethical dilemma where the
controller of a business unit that
produces and sells industrial components must decide what to
do when her boss misrepresents
orders as sales to meet sales budgets and thus overstates
revenues by one and a half million
dollars.

3. Case
Introduction
Today is Bonnie Morgen’s first day on the job as controller of a
business unit that produces and sells industrial
components. She has been with the company for a number of
years and most recently worked at headquar-
ters, working directly for CFO Ed Judsen. Bonnie is replacing
Jerry Mayfare, who recently left the company
for another opportunity. Jerry’s previous work experience
included 10 years of working at an entrepreneurial
venture. Bonnie had heard that Jerry prided himself on not
having a lot of formal accounting training.
Starting today, Bonnie will work directly for Bill Ridgefield,
the division general manager (GM), but she will still
have responsibility to Ed. Although company policy dictates
that both the GM and CFO have input in the con-
troller’s performance evaluation, the GM’s input has greater
weight for both the annual review and pay raises.
Bill has a reputation as a personable and talented GM, having
started with the company 20 years ago as a
sales management trainee and having progressed through
increasingly responsible positions. Ed started with
the company as an accounting trainee about the same time as
Bill and was promoted to CFO five years ago.
Bonnie is settling into her new office when Rich, the senior
accounting supervisor, walks into her office and
closes the door with last month’s financial statements in his
hands. Bonnie wants to review them in detail,
because this is the last month of the fiscal year. Rich is well
respected, has been with the company for five
years, and has a solid background in both auditing and
manufacturing.

4. Bonnie: Rich, sit down. You look troubled.
Rich: Yes, the internal forecast we prepared last month for Jerry
and Bill showed us missing the budgeted
income this year. My analysis showed that an unexpected raw
material price increase combined with the work
stoppage at one of our biggest customers explains most of the
shortfall. Jerry claimed that he was being pres-
sured by Bill, so his solution was to play some games.
Bonnie: Let’s face it—Bill can be quite intimidating with
someone easily browbeaten, especially if they cannot
justify his or her position on an issue. Some big bonuses are on
the line, and everything rides on meeting
the budgeted profit. Personally, I think the criteria for bonuses
and promotions puts too much emphasis on
meeting the budget. That can make it hard to stand up against
any “creative accounting.” But, that is part of
the job.
Rich: Well, apparently Jerry felt he had to do something.
Bonnie: Bill must have scared him. (Laughing) You know Gary
at headquarters? He used to work for Bill.
Gary loves to tell the story about dealing with Bill when the
forecast showed that the budget would be missed.
The story goes that Bill asked a ton of very relevant questions,
and Gary answered every one of them. Bill
then joked that Gary should not record depreciation for the
month so that the budgeted profit target would be
met. Even though Bill’s tone made it clear that it was a joke,
Gary said that he made sure not to smile. Instead
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© 2018 IMA Educational Case Journal. All rights reserved.

5. SAGE Business Cases
Page 3 of 5
Bonnie Morgen: First Day on the Job and Facing an Ethical
Dilemma
he told Bill that that the profit plan targets would not be met
through accounting tricks. So, what did Jerry do?
Rich: He booked some new orders as sales.
Bonnie: What! The lead time would mean that those orders
would not be completed and shipped for
months—until early next year. What was Jerry thinking?
Rich: He did not care. More than once I heard him say that he
was a big-picture guy, and no one should
expect him to learn about the detailed accounting rules.
Bonnie: Yeah, I heard something about that at headquarters.
Someone needs to look at the selection and
hiring process. I know the job description for my position is not
that well defined. So, what justification did he
give for his action?
Rich: He said an order is as good as a sale, and they would
eventually be manufactured and shipped. It was
only a slight timing issue.
Bonnie: Did you try to talk him out of it?
Rich: Yeah, but Jerry was not someone to cross. The
environment here has become quite caustic under Jer-

6. ry’s leadership. Earlier in the year, Jerry tried to pressure
Tammy to hold back some bills and told her not to
accrue them. She flat out refused. When we ended up missing
the budget, Jerry wrote her up for insubordi-
nation.
Bonnie: Is that why Tammy transferred out?
Rich: I suspect so. Unlike Tammy, I cannot afford to make
waves or change jobs right now. Jerry was letting
me work at home some days so that I could care for my kids
when my wife had to go in for her medical treat-
ments.
Bonnie: How is Jane coming along?
Rich: The doctors are cautiously optimistic. Thanks for asking.
But, back to the Jerry issue. I told him that I
was not comfortable recording those orders as sales, since doing
so would be a blatant violation of revenue
recognition rules. I tried to be less confrontational than Tammy
would have been under the same circum-
stances.
Bonnie: Exactly what did he do then?
Rich: He told me to stop being such a “bean counter” type and
look at the big picture. He then hand selected
some newly arrived orders and recorded them himself as
completed sales.
Bonnie: What’s the damage? How far off are last month’s
reported results.
Rich: Not trivial any way you look at it, qualitatively or
quantitatively. Booking those orders resulted in a mate-

7. rial overstatement of last month’s income of $121,171 and an
overstatement of revenue by $1,514,643. Plus,
we are essentially stealing sales from next year. I have the files
here.
Bonnie: Did you go to Bill once you saw that Jerry would not
change his mind?
Rich: Before we knew it Jerry was gone, and you were replacing
him. I figured I would lay the whole thing out
for you.
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© 2018 IMA Educational Case Journal. All rights reserved.
SAGE Business Cases
Page 4 of 5
Bonnie Morgen: First Day on the Job and Facing an Ethical
Dilemma
Assignment Questions
Answer Questions 1 to 5 from Bonnie’s perspective. Please
watch the word limitations. An outline format for
the answers is acceptable.
1. In 100 words or less, describe the ethical dilemma.
2. In 100 words or less, explain how organizational culture may
have influenced and con-
tributed to the ethical dilemma identified in Question 1.
3. In 100 words or less, based on the IMA® (Institute of
Management Accountants) State-

8. ment of Ethical Professional Practice, identify the standard(s)
that would be violated if
Bonnie ignored the ethical dilemma identified in Question 1.
4. Identify and describe alternative course(s) of action for
Bonnie.
5. Recommend a course of action for Bonnie, a member of IMA.
http://dx.doi.org/10.4135/9781526490650
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© 2018 IMA Educational Case Journal. All rights reserved.
SAGE Business Cases
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Bonnie Morgen: First Day on the Job and Facing an Ethical
Dilemma
http://dx.doi.org/10.4135/9781526490650Bonnie Morgen: First
Day on the Job and Facing an Ethical DilemmaCaseAbstract
Sheet1American Indian / Alaska Native (includes
Hispanic)Asian / Pacific Islander (includes Hispanic)Black
(includes Hispanic)Hispanic (any race)White (includes
Hispanic)National Cancer Institute (2018) Lung and bronchus
cancer. Retrieved from Janary 8, 2019 from
https://seer.cancer.gov/explorer/application.php?site=47&data_t
ype=1&graph_type=2&compareBy=race&chk_sex_1=1&chk_rac
e_5=5&chk_race_4=4&chk_race_3=3&chk_race_6=6&chk_race
_2=2&chk_age_range_1=1&chk_data_type_1=1&advopt_precisi
on=1&advopt_display=1&showDataFor=sex_1_and_age_range_
1_and_data_type_1Year of DiagnosisRate per 100,000Rate per
100,000Rate per 100,000Rate per 100,000Rate per
100,000200045.741.877.834.268.8200147.9417934.168.7200244

9. .640.475.834.16820035040.977.334.567.1200451.740.575.1356
5.8200548.740.273.733.865.9200646.439.873.43265.8200743.1
38.871.232.765.220084538.570.832.263.9200940.13971.631.86
3.1201042.43767.830.360.4201139.636.664.129.458.5201236.6
36.764.328.257.5201339.936.660.528.856.32014323461.326.85
5.4201538.734.457.42653.2
Rubic_Print_FormatCourse CodeClass CodeAssignment
TitleTotal PointsHLT-362VHLT-362V-O501Summary and
Descriptive Statistics100.0CriteriaPercentage1: Unsatisfactory
(0.00%)2: Less Than Satisfactory (65.00%)3: Satisfactory
(75.00%)4: Good (85.00%)5: Excellent
(100.00%)CommentsPoints EarnedContent100.0%Measures of
Central Tendency (Mean, Median and Mode)25.0%Measures of
central tendency are not calculated.Measures of central
tendency are partially calculated, but two required calculations
are missing.Measures of central tendency are mostly calculated,
but one required calculation is missing.N/AMeasures of central
tendency are calculated.Measures of Variation (Variance,
Standard Deviation and Range)25.0%Measures of variation are
not calculated.Measures of central variation are partially
calculated.Measures of central variation are mostly calculated,
but one required calculation is missing.N/AMeasures of central
variation are calculated for variance and standard deviation.
Range is identified.Analysis of Descriptive
Statistics25.0%Analysis of the descriptive statistics for
differences and health outcome recommendations between the
groups is not included.Analysis of the descriptive statistics for
differences and health outcome recommendations between the
groups is incomplete or incorrect.Analysis of the descriptive
statistics for differences and health outcome recommendations
between the groups is included but lacks accuracy, explanation,
or supporting details.Analysis of the descriptive statistics for
differences and health outcome recommendations between the
groups is complete and mostly accurate and contains
explanation and supporting details.Analysis of the descriptive

10. statistics for differences and health outcome recommendations
between the groups is extremely thorough and accurate and
includes substantial explanation and supporting details.Excel
Formulas20.0%Excel formulas are incomplete or incorrect.Excel
formulas are partially included or contain significant errors that
affect problem solutions.Excel formulas are mostly included and
contain minor errors.Excel formulas are included for all
problems and contain only minor errors.Excel formulas are
complete and correct for all problems.Mechanics of Writing
(includes spelling, punctuation, grammar, language
use)5.0%Surface errors are pervasive enough that they impede
communication of meaning. Inappropriate word choice or
sentence construction is used.Frequent and repetitive
mechanical errors distract the reader. Inconsistencies in
language choice (register) or word choice are present. Sentence
structure is correct but not varied.Some mechanical errors or
typos are present, but they are not overly distracting to the
reader. Correct and varied sentence structure and audience-
appropriate language are employed.Prose is largely free of
mechanical errors, although a few may be present. The writer
uses a variety of effective sentence structures and figures of
speech.Writer is clearly in command of standard, written,
academic English.Total Weightage100%