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Veronica is an intern in the Accounting Department at Kessler Industries

Veronica is an intern in the Accounting Department at Kessler Industries, a manufacturer of precision medical instruments. She is anxious to make a good impression because she wants to be offered a full-time position at this company when she has completed her internship.
One of the tasks that Veronica is given is to help prepare the company’s internal sustainability report, which is prepared using GRI Standards. The company does not obtain independent-party assurance on its sustainability report since the report is mainly used for internal purposes and management does not feel that assurance is necessary. Veronica is excited because she is a firm believer in the need for a company to have sustainable practices.
The controller, Andy Thomas, instructs Veronica to skip the report section where the quantity of hazardous waste processed is reported. Andy explains that although this report is intended mainly for internal use, there is always a chance with any written or electronic document that it could make its way into the public’s hands. Management feels that there would be public backlash over the hazardous waste, even though the company does not believe the hazardous waste creates any public health risk. The waste is disposed of through legal and responsible channels.
This GRI report goes to the board of directors and to the company’s managers. In addition, it is given to the company’s bankers.
Veronica protests timidly and says that hazardous waste should probably be recorded and explained if the report is being prepared using the GRI Standards framework. The controller shuts her down promptly, stating that it is not open for debate. Andy points out that the report is only used internally and everyone in the company knows that some hazardous waste is generated, so no harm is done by not stating the obvious. Andy feels that the risk of public disclosure is much greater than any potential harm from not including the hazardous waste on the report.
Veronica is torn about what to do. She really wants to work at this company at the conclusion of her internship. As she considers leaving the hazardous waste figures off the report as instructed, she rationalizes the potential omission by thinking that she will be able to make inroads on the reporting and prepare complete GRI reports in the future when she is a full-time employee. If she’s not hired, she will have no opportunity to have a positive impact on this company.
Requirements

Using the IMA Statement of Ethical Professional Practice (Exhibit 1-7) as an ethical framework, answer the following questions:
What is(are) the ethical issue(s) in this situation?
What are Veronica’s responsibilities as a management accountant?
Are there any mitigating circumstances? Is Veronica’s rationalization correct?

Full Answer Section

Integrity: Leaving out the information goes against the principle of integrity as it involves deliberately withholding a material fact and potentially misleading stakeholders.
Credibility: Excluding the data would undermine the credibility of the report and jeopardize the company's reputation for transparency and commitment to sustainability standards.

Veronica's Responsibilities:

Veronica, as a management accountant and intern, has the following responsibilities:

Compliance: Upholding the relevant laws, regulations, and professional standards, which in this case includes adhering to the GRI Standards framework when preparing the sustainability report.
Confidentiality: Maintaining the confidentiality of sensitive information while respecting the public's right to know about matters that could impact them. Balancing confidentiality with transparency is crucial.
Competence: Performing her duties with professional competence and diligence, which involves understanding the ethical implications of her actions and applying professional judgment.

Mitigating Circumstances and Veronica's Rationalization:

There are limited mitigating circumstances in this situation. Veronica might argue that since the report isn't externally assured and mainly used internally, the omission might not have significant consequences. However, this doesn't eliminate the ethical concerns mentioned above.

Veronica's rationalization is not correct. While her desire for a full-time position is understandable, compromising her ethical principles and professional standards is not a justifiable solution. Additionally, there's no guarantee that she will be able to improve reporting practices in the future, even if she's hired.

Conclusion:

Veronica is in a difficult situation where her personal aspirations conflict with her ethical obligations. She should strongly consider raising these concerns with her supervisor, emphasizing the ethical implications of omitting the information and the potential consequences for the company's reputation. If her concerns are not addressed, she should document her efforts to raise the issue and consider seeking guidance from an ethics hotline or professional organization.

It's important for Veronica to remember that compromising her ethical integrity might have long-term consequences for her career and professional reputation. Even if she gains a full-time position in the short term, the potential for future issues and professional sanctions associated with unethical behavior could outweigh any initial benefits.

Sample Answer

Ethical Issues in Veronica's Situation:

Based on the IMA Statement of Ethical Professional Practice (Exhibit 1-7), the ethical issues in this situation are:

Objectivity: Omitting the hazardous waste information from the report would violate the principle of objectivity as it distorts the true and fair presentation of the company's sustainability practices. The report wouldn't represent a complete and accurate picture.