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Required:
1. Prepare an organization chart for Ridell University.
2. Which of the positions on your chart would be line positions? Why would they be line positions?
Which would be staff positions? Why?
3. Which of the positions on your chart would have a need for accounting information? Explain.
PROBLEM 1-6 Ethics in Business [ LO4 ]
Adam Williams was recently hired as assistant controller of GroChem, Inc., which processes chem- icals for use in fertilizers. Williams was selected for this position because of his past experience in chemical processing. During his fi rst month on the job, Williams made a point of getting to know the people responsible for the plant operations and learning how things are done at GroChem.
During a conversation with the plant supervisor, Williams asked about the company procedures for handling toxic waste materials. The plant supervisor replied that he was not involved with the disposal of wastes and suggested that Williams might be wise to ignore this issue. This response strengthened Williams’ determination to probe this area further to be sure that the company was not vulnerable to litigation.
Upon further investigation, Williams discovered evidence that GroChem was using a nearby residential landfi ll to dump toxic wastes—an illegal activity. It appeared that some members of GroChem’s management team were aware of this situation and may have been involved in arranging for this dumping; however, Williams was unable to determine whether his superior, the controller, was involved.
Uncertain how he should proceed, Williams began to consider his options by outlining the fol- lowing three alternative courses of action:
• Seek the advice of his superior, the controller.
• Anonymously release the information to the local newspaper.
• Discuss the situation with an outside member of the board of directors with whom he is acquainted.
Required:
1. Discuss why Adam Williams has an ethical responsibility to take some action in the matter of GroChem, Inc., and the dumping of toxic wastes. Refer to the specifi c standards (competence, confi dentiality, integrity, and/or credibility) in the Statement of Ethical Professional Practice established by the Institute of Management Accountants to support your answer.
2. For each of the three alternative courses of action that Adam Williams has outlined, explain whether or not the action is appropriate according to the Statement of Ethical Professional Practice established by the Institute of Management Accountants.
3. Assume that Adam Williams sought the advice of his superior, the controller, and discovered that the controller was involved in the dumping of toxic wastes. Describe the steps that Williams should take to resolve this situation.
(CMA, adapted) PROBLEM 1-7 Ethics in Business [ LO4 ]
Consumers and attorney generals in more than 40 states accused a prominent nationwide chain of auto repair shops of misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments. Lynn Sharpe Paine reported the situation as follows in “Managing for Organizational Integrity,” Harvard Business Review, March-April, 1994:
In the face of declining revenues, shrinking market share, and an increasingly competitive market . . . management attempted to spur performance of its auto centers. . . . The automotive service advisers were given product-specifi c sales quotas—sell so many springs, shock absorbers, alignments, or brake jobs per shift—and paid a commission based on sales. . . . [F]ailure to meet quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the
“pressure, pressure, pressure” to bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the only way to satisfy top management was by selling products and services to customers that they didn’t really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell customers unnecessary parts and services.
Required:
1. How would this behavior affect customers? How might customers attempt to protect themselves against this behavior?
2. How would this behavior probably affect profi ts and employment in the automotive service industry?
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PROBLEM 1-8 Line and Staff Positions; Organization Chart [ LO2 ]
The Association of Medical Personnel (AMP) is a membership/educational organization that serves a wide range of individuals who work for medical institutions including hospitals, clinics, and medical practices. The membership is composed of doctors, nurses, medical assistants, and professional ad- ministrators. The purpose of the organization is to provide individuals in the medical fi eld with a professional organization that offers educational and training opportunities through local chapters, a monthly magazine (AMP Review), continuing education programs, seminars, self-study courses, and research publications.
AMP is governed by a board of directors who are members elected to these positions by the membership. The chairperson of the board is the highest ranking volunteer member and presides over the board; the board establishes policy for the organization. The policies are administered and carried out by AMP’s paid professional staff. The president’s chief responsibility is to manage the operations of the professional staff. Like any organization, the professional staff of AMP is com- posed of line and staff positions. A partial organization chart of the AMP professional staff is shown in Exhibit A.
E X H I B I T A
Partial Organization Chart for the Association of Medical Personnel
Vice President, Administration Vice President,
Educational Programs
Vice President, Membership Vice President,
Research
Vice President, Publications
Editor, AMP Review
Board of Directors
Staff Liaison to the Chairperson
Jere Feldon
Meetings Coordinator
Director of Continuing Education Programs
Director of Membership
Marketing
Director of General Accounting
Director of Seminars
and Conferences Editor of
Special Publications Jesse Paige
Director of Chapter Services
Director of Data Processing
Director of Self-Study Programs Lana Dickson
Manager of Personnel George Ackers President
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Four of the positions appearing in the organization chart are described below.
Jere Feldon, Staff Liaison to the Chairperson
Feldon is assigned to work with the chairperson of AMP by serving as an intermediary between the chairperson and the professional staff. All correspondence to the chairperson is funneled through Feldon. Feldon also works very closely with the president of AMP, especially on any matters that have to be brought to the attention of the chairperson and the board.
Lana Dickson, Director of Self-Study Programs
Dickson is responsible for developing and marketing the self-study programs offered by AMP. Self- study courses consist of cassette tapes and a workbook. Most of the courses are developed by outside contractors who work under her direction. Dickson relies on the director of membership marketing to assist her in marketing these courses.
Jesse Paige, Editor of Special Publications
Paige is primarily responsible for the publication and sale of any research monographs that are gener- ated by the research department. In addition, he coordinates the publication of any special projects that may be prepared by any other AMP committees or departments. Paige also works with AMP’s Publication Committee which sets policy on the types of publications that AMP should publish.
George Ackers, Manager of Personnel
Ackers works with all of the departments of AMP in hiring professional and clerical staff. The indi- vidual departments screen and interview prospective employees for professional positions, but Ackers is responsible for advertising open positions. Ackers plays a more active role in the hiring of clerical personnel by screening individuals before they are sent to the departments for interviews. In addition, Ackers coordinates the employee performance evaluation program and administers AMP’s salary schedule and fringe benefi t program.
Required:
1. Distinguish between line positions and staff positions in an organization by defi ning each. In- clude in your discussion the role, purpose, and importance of each.
2. Many times, confl icts will arise between line and staff managers in organizations. Discuss the characteristics of line and staff managers that may cause confl icts between the two.
3. For each of the four individuals identifi ed by name in the text,
a. Identify whether the individual’s position is a line or staff position and explain why.
b. Identify potential problems that could arise in each individual’s position, either due to the type of position (i.e., line or staff) or to the location of the individual’s position within the organization.
(CMA, adapted)