Accounting professional requires at least two skill sets. The first is to be technically competent. Knowing how to capture, manage, and report information is a essential skill. Second, ability to assess manager and employee actions and biases for accounting analysis is another skill. For ex, knowing how the person is compensated helps anticipate information biases.
Background: Suppose that your company sells portable housing to both general contractors and the government. It sells jobs to contractors on the bid basis. Contractor asks for three bids from different manufacturers. Combination of low bid and high quality wins the job. Though, jobs sold to government are bid on a cost-plus basis. This means price is determined by adding all costs plus a profit based on cost at a specified percent, such as 10%. You observe that amount of overhead allocated to government jobs is higher than that allocated to contract jobs. These allocations concern you.
1. Who are the stakeholders?
2. What are the ethical issues?
3. What is your recommendation to financial officer of your company?