The IMA® Committee on Ethics is proud to announce that Thomas D’Angelo, DPS, CMA, CFM, and Marco Lam, Ph.D., CMA, CPA, CGFM, have won the Best Case Award in the 18th annual Carl Menconi Case Writing Competition for their case, “Wonder, Thunder, Blunder, and Plunder! A Case of Goodwill Impairment and Failed Governance in a Family-Owned Business.”

The Committee on Ethics has given Steven M. Mintz, Ph.D.; Barbara M. Porco, Ph.D.; and Kelly Ulto an honorable mention for their case, “Water Stress in East Africa.”

The competition is named in memory of Carl Menconi, who held leadership positions in IMA for many years and served as chair of the IMA Committee on Ethics. The objective of the competition is to develop and distribute business ethics cases with specific application to management accounting and finance issues and that use the IMA Statement of Ethical Professional Practice as a reference or guidance tool.

The winning case and teaching notes will be available later this year for use in a classroom or business setting. IMA academic members will be able to access and download the teaching notes from the Academic Teaching Notes library via the IMA Educational Case Journal section of IMA’s website.


The characterization of intergenerational family businesses, specifically the failure of later generations to perpetuate the successes of the earlier generations, seemed sadly relevant as Rob Morrison, CFO of AT World Travel Professionals (ATWTP), considered the company’s current situation. Several years of cancellations and weak demand in the corporate meetings, incentives, conferences, and exhibitions (MICE) industry, due primarily to the COVID-19 pandemic, were testing the very limits of ATWTP’s financial strength and resourcefulness. While the outlook for the MICE industry was one of cautious optimism due to generally improving economic conditions, Rob couldn’t help but wonder if it was too little, too late.

The Road to CFO

Originally hired by ATWTP as a 22-year-old college graduate, Rob progressed steadily through the company’s finance function, holding positions of ever-increasing responsibility. He worked hard to expand his knowledge—consistently sharpening his accounting, finance, strategic and critical thinking skills through his own initiative. Rob demonstrated his expertise by earning the globally recognized CMA® (Certified Management Accountant) certification. Over time, Rob’s reputation as a talented financial manager, veteran of the travel industry, and moderating voice in inter-family disagreements made his superiors recognize him as an invaluable asset. His perseverance and loyalty eventually paid off, culminating in Rob’s promotion to CFO.

Now, with the passage of time and at this critical juncture for ATWTP, Rob reflected on his experience as an “outsider” in this closely held, family-owned business. As a nonfamily member, Rob frequently felt a growing sense of fragmentation and uncertainty within ATWTP. Despite serving as the top financial executive, lately he found it difficult to satisfy the divergent demands of the company’s various constituents. Nominally, he reported to CEO Michael Kelleher, a family member and ATWTP shareholder through marriage. But in reality, since his promotion to CFO, Rob has spent much of his time trying to navigate the organization’s charged political environment which, much like the family’s interpersonal relationships, is extremely complex. Family dysfunction frequently spills over into the business, resulting in shifting loyalties, alliances of convenience, and proxy wars between sibling shareholders. These were carried out by shareholders providing support for select nonfamily member employees and advisors who opportunistically shared their benefactors’ perspectives and acted on their behalf. Rob found himself having to justify financial strategies and decisions made in the best interests of the company but not necessarily favorable to all its constituents. Remaining neutral and positive required an increasingly greater effort, particularly as ATWTP’s financial challenges mounted.

As cash inflows from client payments continued to erode and ATWTP’s so-called “war chest” of cash reserves dwindled, it became clear to Rob that immediate action needed to be taken. Rob skillfully led a restructuring effort focused on eliminating nonessential activities and expenditures. This allowed ATWTP to sustain operations, albeit at a fraction of its usual business volume.

Goodwill Impairment

Unfortunately, the restructuring also exposed a reduction in value of an acquired company, G1 Exhibitions, whose performance and financial condition were tracked as a separate business unit of ATWTP. Several years earlier, ATWTP had purchased G1 Exhibitions through the acquisition of 100% of its equity and had paid a substantial premium in excess of the fair value of its acquisition-date net identifiable assets, resulting in the recognition of goodwill. Up to this point, goodwill related to the acquisition of G1 Exhibitions was carried at the original amount recorded. However, as the end of the fiscal year approached, Rob believed that there was a strong likelihood that the carrying value of goodwill exceeded its current fair value and that the annual test of goodwill would result in a material impairment charge.

The recognition of a substantial goodwill impairment had potentially dire consequences for ATWTP. The financial ratios it was required to maintain to be in compliance with its bank loan covenants could fail to be satisfied if the goodwill impairment charge was significant enough. Contractually, failure to meet the loan covenants gave the lender the right to demand immediate repayment of part or all of the outstanding loan. Thus, the actual amount of the goodwill impairment would be of paramount importance to ATWTP and could determine its need for alternative financing if its current loan was called.

Anticipating an unfavorable accounting result, Rob formulated a multipart contingency plan. First and foremost, he would proactively meet with the bank and notify them of the probability of violating its loan covenants. Experience had taught Rob that candor and humility were the best approaches to building credibility, especially when delivering bad news. Concurrently, he would present the strategic plan for ATWTP that, assuming improvement in macroeconomic conditions (as generally forecast) and continued discipline in spending, illustrated a reasonable road map of recovery to profitability. Rob would ask for the bank’s lenience in not calling the loan and demonstrate ATWTP’s ability to satisfy the loan covenants in the future. If Rob failed to obtain agreement from the bank and if no other financing options were available, Rob suggested that a capital infusion from the shareholders would be necessary, a proposal that was sure to be an extremely unpopular concession among the family member owners accustomed to only receiving cash in the form of distributions.

Derailing the Gravy Train

Rob had communicated his concerns internally regarding the gravity of ATWTP’s financial circumstances well in advance of the year end and had received and responded to numerous questions related to the goodwill impairment, its potential impact on the bank loan, and the very real possibility that the only financing available to ATWTP might be from its shareholders. In addition to a daily barrage of emails, texts, and phone calls from shareholders and advisory board members, Rob received an unannounced, end-of-the-day, in-person visit from Rachel Townsend. Rachel was formally co-president and later president of ATWTP and the driving force behind the acquisition of G1 Exhibitions. Putting aside the serious nature of their discussion, Rob couldn’t help but appreciate the irony of an exasperated Rachel, loudly objecting to the notion that she, as a shareholder, be responsible for investing her own funds to keep ATWTP afloat. It was, after all, Rachel who had insisted that ATWTP acquire G1 Exhibitions at a considerable premium to the value of its net identifiable assets, which ultimately gave rise to the now impaired goodwill.

Despite Rob having witnessed many of Rachel’s emotional tirades during his tenure at ATWTP, it was never pleasant being the target of her ire, where he now reluctantly found himself. Doing his best to remain calm, Rob gently reminded Rachel that ATWTP was owned by her and her siblings and that the millions of dollars that had been distributed to them over the years resulted from the profits generated by their company. Now, as ATWTP faced an existential crisis, it didn’t seem unreasonable to Rob that the company turn to its shareholders for funds in order to continue the operations of the business if the bank loan were to be called. Rachel listened to Rob as he carefully outlined the steps in his contingency plan, but she offered no further insight or feedback. Her displeasure was palpable as she simply stood up and walked out of Rob’s office, signaling the end of their intense interaction. Within 30 minutes of Rachel’s departure, Rob received an urgent email from advisory board members Graham Archer and Walker Smith, insisting on a meeting as soon as possible to “resolve the current accounting issue.”

As Rob considered his strategy for the meeting, he became increasingly suspicious of Graham and Walker’s motives. He believed that he had been both proactive and transparent in communicating ATWTP’s financial challenges to all appropriate individuals. However, characterizing the company’s current situation as an “accounting issue” that simply needed to be “resolved” was misleading at best. Rob sensed that the true impetus for the meeting was strong resistance from Rachel and at least some of the other shareholders to his proposal that they, in the absence of any other available sources, provide financing for the continued operations of ATWTP. Rob had the ominous feeling that Graham and Walker had been tasked with deflecting shareholder responsibility for funding ATWTP—at any cost.

A Family-Owned Business

ATWTP is a leading organization in the MICE industry. Originally started as a travel agency, the company was founded in the late 1940s by Andrew Townsend Sr. His timing was fortuitous as Americans began traveling both within the United States and internationally. In addition, due to the expansion of intercontinental flights in the early 1960s, Andrew believed that corporations would require employees to travel more frequently as they attempted to access distant untapped markets. To accommodate this need, he methodically reorganized ATWTP to provide comprehensive travel services exclusively to several large corporations with whom he had developed solid relationships. Over the 30 years that Andrew led ATWTP, the company was profitable, experiencing growth in revenue as it continued to attract corporate clients. Upon his retirement, Andrew appointed his only child, Andrew Townsend Jr., as president of ATWTP.

While Andrew Sr. had built a solid regional business that allowed a very comfortable lifestyle for his family, his son’s impact on ATWTP can justifiably be described as transformative. Andrew Jr. brought an entrepreneurial and strategic perspective to ATWTP, identifying segments of the travel market that he deduced would be the catalyst for future profitable growth. Through his scrutiny, he found that clients were increasingly requesting assistance from ATWTP in booking airfares, hotels, car rentals, and other services related to their corporate meetings, conferences, and events. Andrew Jr. also realized that, unlike fixed commissions from the sale of unbundled travel products, ATWTP would have significantly greater flexibility in pricing in what would later come to be known as MICE bundled services. Andrew Jr.’s pioneering efforts to specialize in this area essentially created the beginning of the MICE industry, currently estimated at nearly $1 trillion. From its humble origins as an ordinary travel agency, ATWTP evolved into a highly profitable and valuable enterprise.

ATWTP flourished under Andrew Jr.’s leadership despite a number of challenging periods of economic volatility and downturns, including the Gulf Wars, 9/11, and, in particular, the Great Recession of 2008-2009. That daunting experience left Andrew Jr. physically and cognitively exhausted, and, by 2012, he was in his mid-60s and decided that it was the appropriate time for him to step aside and appoint a successor. At the time, Andrew Jr. had five adult children ranging in age from 32 to 45. Over the past few years, he had transferred his ownership in ATWTP to his children in equal shares and through tax-advantaged means, so the issue of third-generation ownership was settled. Succession to the leadership of ATWTP, however, proved to be a greater challenge that would have consequential, long-term implications for the company.

Despite its position as one of the leading companies of the MICE industry, ATWTP was, at its core, a family business. Andrew Jr. had consistently expressed a strong preference to retain the leadership of ATWTP within the Townsend family. He now saw that as a must. Two of his children, both of whom worked at ATWTP at the time, had communicated significant interest in filling the role their father would vacate. His daughter Rachel, then 45, is Andrew Jr.’s eldest child and coordinated ATWTP’s considerable philanthropic activities. His son Parker, then 43, worked in the marketing department where his primary responsibility was directing and narrating ATWTP’s promotional videos. Andrew Jr. considered his options. Rachel was bright, passionate about her work, and fiercely loyal to those who shared her values and opinions. On the other hand, her abrasive personality and often cynical outlook made her somewhat unpopular at ATWTP, a genuine concern for Andrew Jr.

Conversely, Parker had a warm and disarming disposition that made him well liked. His father had long recognized his ability to attract and influence others and had hoped that the strength of his son’s personality would allow Parker to someday play an important role at ATWTP. But Parker had his own issues, and, throughout his life, he had caused his parents considerable trepidation. From misadventures in private schools, several incidents of driving under the influence, and volatile personal relationships, Parker often seemed to be testing the limits of behavior that his life of privilege afforded him. Since joining ATWTP, however, he seemed to have put most of his challenges behind him, and Andrew Jr. hoped that Parker was ready to take on substantially more responsibility.

After a period of both emotional and pragmatic introspection, it was clear to Andrew Jr. that the strengths and weaknesses of Rachel and Parker differed in many critical aspects. In his candid estimation, Rachel had the superior intellect and business acumen, while Parker had more developed people skills, including the essential ability to motivate others. To resolve ATWTP’s succession conundrum, he decided upon a novel approach based on the combined capabilities of Rachel and Parker. He anticipated that naming the siblings as co-presidents would allow them to complement each other as they carried out the leadership and guided the future strategic direction of ATWTP. Of course, this also allowed Andrew Jr. to bypass the onerous decision of choosing one of his children over the other. He realized that this course of action was not without risk, as it was predicated on cooperation and harmony between Rachel and Parker. Nonetheless, Andrew Jr. believed he could mitigate much of this risk through his active involvement in facilitating a smooth transition of leadership to the third generation.

Transition and Beyond

Initially, the change in leadership seemed to be well received by most ATWTP stakeholders. To solidify existing commercial relationships, Andrew Jr. met with major clients and suppliers to confirm his retirement and provide assurance that he would personally oversee an orderly shift in authority. During the transition period, the continued physical presence of Andrew Jr. at ATWTP had a general calming effect on its employees, and a feeling of “business as usual” prevailed. The company continued to operate smoothly and achieve strong financial performance. Thus, after 12 months, Andrew Jr. withdrew from ATWTP, and the co-presidents assumed full control of the company.

At the outset of their co-presidency, Rachel and Parker coordinated efforts as they attempted to escape the long shadow cast by their father and his legacy. Over time, however, it became evident that their management styles clashed, as did their vision, strategy, and goals for the company. Parker was content with the current operations of ATWTP, which, in his view, consisted of happy employees, loyal customers, and steady profitability. Predictable profitability resulted in dependable distributions and, consequentially, happy shareholders. He was naturally risk-averse and pleased to maintain ATWTP’s relative position in the MICE industry.

Rachel’s approach to defining ATWTP’s future differed dramatically from that of her brother’s. She was not at all satisfied with the existing trajectory of the company, in particular its current rate of revenue and profitability growth. Rachel believed now was the appropriate time to aggressively pursue opportunities to grow ATWTP and accomplish her stated objective of distancing the company from its competitors in the MICE industry. Her preferred method to accelerated growth was through one or more strategic acquisitions. Parker disagreed, citing the well-documented risks inherent in corporate acquisitions. As time went on, Rachel became increasingly frustrated with Parker and what she perceived to be his complacency with the status quo.

Nearly five years on, the ATWTP co-presidency showed significant signs of stress. Despite the company’s strong financial performance, the siblings continued to be at odds regarding its strategic direction. In addition, Parker was then involved in a highly sensationalized divorce trial with salacious details seemingly reported daily in the media. Rachel was deeply concerned, both about the impact of negative publicity on ATWTP as well as the distracting effect it had on Parker. When she suggested to her brother that he take a leave of absence for his good and the good of the company, Parker refused. Rachel then opportunistically appealed to her father who, by this point, usually tried to avoid active involvement in ATWTP. Given the serious nature of the situation, however, Andrew Jr. agreed to intercede. After a contentious and emotional meeting, Parker agreed to resign as co-president immediately. The departure of the popular Parker triggered division and amplified the tense political environment at ATWTP.

With Parker and his objections out of her way, Rachel focused most of her attention on identifying suitable acquisition targets. Leveraging her knowledge of the industry, she concluded that G1 Exhibitions, a privately owned company that exclusively organized corporate, trade, and governmental exhibitions, would be a natural strategic fit for ATWTP, which currently had only modest sales in the exhibitions segment. Rachel knew the family that owned G1 Exhibitions and decided to contact them to ascertain their interest in selling. Her timing was fortunate as the founder and majority shareholder lacked an obvious successor and was willing to explore his options. Concerned that other industry participants might also be interested in acquiring G1 Exhibitions, Rachel quickly sought concurrence for the purchase from her sibling shareholders. She presented ambitious forecasts to justify a purchase price that would later be exposed as excessive when G1 Exhibitions failed to achieve its projected operating targets. Of the other Townsend shareholders, only Parker dissented. The horizontal acquisition was completed within 12 months of Rachel’s initial inquiry.

The post-acquisition integration of G1 Exhibitions proved to be far more difficult than Rachel had ever anticipated. Although ATWTP and G1 Exhibitions were both family-owned businesses, the existing cultures within the companies differed radically. While ATWTP had devolved into a company operating in a divided, highly charged political environment, G1 Exhibitions was a cohesive organization where an atmosphere of cooperation prevailed. Therefore, Rachel decided to allow G1 Exhibitions to maintain a relatively high level of independence from the operations of ATWTP, attempting to preserve G1 Exhibitions’ harmonious culture and operating success.

Over the next few months, it became apparent that Rachel’s priority was G1 Exhibitions, with a diminishing amount of time spent leading ATWTP. This hurt morale at ATWTP and ultimately resulted in lower-quality service to its clients. It was evident that Rachel was under a great deal of stress, and her absences were noticeably more frequent. This situation didn’t go undetected, and Parker, who still blamed his sister for his own ouster from ATWTP, led a campaign among the shareholders and his father to remove Rachel. With the support of four of the five Townsend shareholders and Andrew Jr., Rachel was unceremoniously removed from the presidency and her brother-in-law, Michael Kelleher, was installed as CEO.


During the first generation of leadership, structured governance was virtually nonexistent as Andrew Sr. insisted on making all important decisions affecting ATWTP. He used his experience and “gut feel” as the basis for reaching his conclusions, without input from any other sources. After Andrew Jr. succeeded his father and began to achieve success in his own right, he also didn’t immediately see the advantage of a conventional corporate governance structure.

Over time, however, he found himself discussing various business situations with trusted friends and associates outside ATWTP. Andrew Jr. came to believe that the opinions and advice he received from them were extremely valuable and often the impetus in making a particular decision. He realized that establishing some sort of governance that would allow for the efficient sharing of perspectives and ideas would likely enhance the quality of the decision-making process and therefore the final decisions being made at ATWTP. However, Andrew Jr. was famously frugal and had consistently managed ATWTP with the minimum level of administrative expense possible. The prospect of establishing a board of directors, with its associated formality and cost, seemed excessive to him. More critically, he wasn’t willing to yield his absolute authority and control over his company as would be expected if ATWTP put a fiduciary board of directors in place.

Ultimately, Andrew Jr. chose to form an informal advisory board that would provide advice to management and shareholders when asked, but that would have no legal authority or liability. He felt this structure would be easy to implement, would be flexible, and would allow for expertise on demand. Andrew Jr. would select advisory board members and decide how long each would serve. Given the organizational structure of ATWTP, he believed that the informal advisory board model would appropriately fulfill the need for independent governance at ATWTP.

Almost from its inception, ATWTP’s advisory board had served the company much as Andrew Jr. had envisioned. When he retired from active participation in ATWTP, he strongly counseled the new co-presidents to maintain the advisory board as an important resource. Though the members of the advisory board had changed from time to time, it had faithfully contributed valuable independent advice and decision support. Andrew Jr. cautioned Rachel and Parker to resist the temptation to involve individual advisory board members in the day-to-day operations of ATWTP. Rather, he urged them to continue to use the advisory board as he had: to provide expertise, business insight, and high-level feedback.

The advisory board the co-presidents inherited was comprised of five individuals. Wishing to clearly signal their newly granted authority, they obtained shareholder approval to replace any member or all of the existing advisory board and select new members as they saw fit. Specifically, each co-president appointed two advisory board members with the choice of the final member as agreed upon by both Rachel and Parker. Unlike Andrew Jr., who chose advisory board members based on their experience, critical thinking skills, and impartiality, Rachel and Parker made their selections based primarily on their perception of candidates’ loyalty. This approach led to early fractious behavior on the part of the co-presidents and set the precedent for their strained relationship that would follow.

After Parker’s resignation, Rachel used the power vested in her by the shareholders to replace the three advisory board members that were not chosen solely by her. The three new advisory board members were handpicked based on their allegiance to Rachel. Thus, while president, Rachel had effectively “captured” the advisory board through her control of its members. Any independent governance provided by the advisory board would be undermined or circumvented by Rachel’s coercive tactics. Subsequent to her removal from the presidency, the composition of the advisory board selected by Rachel remained intact, allowing her to exert a sort of “shadow authority” at ATWTP.

A Decisive Meeting

At precisely 8 a.m. the next morning, advisory board members Graham Archer and Walker Smith arrived at Rob’s office for the meeting they had demanded the previous day. Both men were unsmiling and had an air of seriousness about them. Rob could sense that this meeting was going to be anything but cordial.

Graham was a lawyer in private practice with exposure to financial issues. In addition to his role as a member of ATWTP’s advisory board, he also served on several fiduciary boards of directors of large, closely held businesses. He was one of the two advisory board members initially selected by Rachel after she became co-president (the other was Walker). Rob had numerous interactions with Graham over the years, some amicable, others contentious. His assessment of Graham was that he was a competent professional whose fierce loyalty to Rachel sometimes clouded his judgment.

Walker was a self-described family business “expert,” specifically in the area of shareholder relationships and succession. He operated a management consulting firm that Rachel had consistently engaged on a variety of projects. After Rob was promoted to CFO, he endured many clashes with Walker, who Rachel used as an intermediary to avoid the appearance of discord between the executives. Rob was always on guard when he dealt with Walker since their respective versions of the truth often differed. In Rob’s opinion, Walker often did more harm than good as he acted in Rachel’s personal interest, regardless of the broader impact on ATWTP or its other shareholders.

Without the usual greetings and pleasantries, the meeting began with the advisory board members asking terse questions regarding the goodwill impairment determination. Rob identified events relevant to ATWTP that triggered the goodwill impairment, primarily the COVID-19 pandemic and the related deterioration of global economic conditions. The goodwill carried on ATWTP’s consolidated financial statements resulted from the acquisition of G1 Exhibitions, which operated solely in the exhibitions segment of the MICE industry. Recent forecasts of improving conditions in the broader MICE industry specifically excluded the exhibitions segment, which may, according to respected industry pundits, have suffered irreparable damage.

The discussion then turned to the methodology used to test for potential goodwill impairment. Rob provided a general overview of commonly used measures and justified his use of the discounted cash flow method based on current projections of G1 Exhibitions’ operating results as a distinct reporting unit. Rob’s analysis showed that G1 Exhibitions’ fair value was less than its current carrying amount, requiring the recognition of a goodwill impairment equal to the difference between the carrying amount and its fair value. In Rob’s opinion, his examination was diligent, unbiased, and supported by objective evidence. If Generally Accepted Accounting Principles (GAAP) were to be adhered to, the goodwill impairment must be recorded.

When Rob was finished, both Walker and Graham offered dissenting opinions. Walker’s argument centered on his belief that Rob, in his capacity as CFO, must protect the ATWTP shareholders, no matter what. This was accompanied by his emotional appeal to Rob to “get on the right side of this issue and do whatever is necessary to prevent the bank from calling ATWTP’s loan.”

Not surprising to Rob, Graham’s approach was dispassionate and well thought out. He argued that financial reporting necessarily involves judgment, estimates, and assumptions. He proceeded to challenge the key assumptions Rob had made in determining that the goodwill was indeed impaired. Most critically, he disputed the forecasted activity for G1 Exhibitions, the most important variable in the discounted cash flow model. Graham suggested that, given the uncertain state of the MICE industry generally and the exhibitions segment in particular, there wasn’t enough visibility to forecast cash flows in a dependable manner.

Rob listened attentively to both men and spoke when they had finished. He agreed with Graham’s assessment of widespread uncertainty in the MICE industry. However, it was for that very reason that Rob believed it was prudent to use conservative assumptions rather than optimistic ones, especially in the absence of evidence to the contrary.

Rob respectfully declared that he stood by his analyses and decision to recognize a goodwill impairment. Further, he believed that the best course of action was to proactively approach the bank, as he had previously described, and prepare for the reality that shareholder contributions may well be required to finance the continuing operations of ATWTP.

As the meeting adjourned, Walker asked Rob if they could have a few minutes to speak privately. His tone softened considerably from his earlier bluster. Walker acknowledged that Rob’s analyses were sound, and, under ordinary operating circumstances, the accounting he proposed would be appropriate. However, he argued that the current circumstances were far from ordinary and presented a true existential crisis for ATWTP. According to Walker, what ATWTP really needed was time for the economy to improve and customer demand to recover. If the bank loan were to be called, he said, “The future of the entire organization would be in serious jeopardy.”

Walker then praised Rob for his financial leadership throughout the downturn and for being a loyal ATWTP employee for many years. “The shareholders recognize your efforts and are appreciative of your dedicated service. They would never ask you to compromise your integrity as a financial professional. Nonetheless, it would be in everybody’s best interest if you would consider broadening G1 Exhibitions’ pessimistic demand assumptions used in your discounted cash flow model. Since your model is forward-looking and there is still considerable uncertainty in the industry, there’s certainly an argument to be made for using somewhat more optimistic inputs. If, as a result, we can delay the goodwill impairment at least until next year, we should be able to avoid violating our loan covenants in the short term.”

Walker continued, “I know that you recognize the severity of this situation, probably better than anyone else. Given this, the shareholders believe that you will do the right thing and are willing to offer you a bonus of $500,000 if you’re able to delay the recognition of the goodwill impairment and prevent the bank from calling our loan. Please confirm your next steps to me as soon as possible.”

Rob was stunned, and his initial reaction was anger. He thought that he had made a convincing argument for the accounting treatment based on the evidence currently available and within the parameters of GAAP. He firmly believed that an honest approach to the bank was the best chance to obtain a temporary waiver of the loan covenants. Suddenly none of that seemed to matter and the saying “the ends justify the means,” with all its negative connotations, came to Rob’s mind.

Ethical Conflict

After Rob had calmed down, he sat down at his desk and took stock of his current situation. Among his many questions, he wondered why the shareholders had chosen Walker, of all people, to deliver their message. Was his boss, CEO Michael Kelleher, aware of the offer? Which of the shareholders had approved Walker to make such an offer? Did the shareholders fully comprehend what they were asking Rob to do? Was this a desperate attempt by the shareholders to avoid further investment in ATWTP, or was this Rachel alone trying to forcefully advance her personal agenda?

Rob wondered if it were really “in everybody’s best interest,” as Walker had stated, if he embellished the outlook for G1 Exhibitions sufficiently as to not require recognizing the goodwill impairment. There were certainly the employees of G1 Exhibitions to consider, as well as some of his own colleagues at ATWTP, who would undoubtably lose their jobs if the unpredictability in the industry continued. The shareholders would be very grateful, and $500,000 was very serious money for a parent like Rob with two children in college.

Upon reflection, Rob had worked hard for many years to establish himself as a capable and conscientious financial executive. He had built a stellar reputation among his fellow finance professionals. Critically, Rob was well-respected by ATWTP’s bank, and the relationship between them was based on mutual trust. Now he was being asked to violate that trust by manipulating his analysis to suit the shareholders’ desired outcome. Rob realized that he was immersed in a serious ethical conflict.

As a CMA and a member of IMA® (Institute of Management Accountants), Rob was required to complete 30 hours of continuing professional education (CPE) annually, including at least two hours of ethics-related training.

Looking for guidance to clarify his ethical dilemma, Rob read the IMA Statement of Ethical Professional Practice. He accessed the Ethics Center on the IMA website beginning with the overarching ethical principles of honesty, fairness, objectivity, and responsibility, and continuing with the ethical standards of competence, confidentiality, integrity, and credibility. Each standard has three to four underlying tenets that provide further description and support. Rob believed that the information contained in the IMA Statement of Ethical Professional Practice, including the section on “Resolving Ethical Issues,” was sufficiently comprehensive to utilize as a framework with which to analyze, and hopefully resolve, his ethical dilemma.

IMA Statement of Ethical Professional Practice

Members of IMA shall behave ethically. A commitment to ethical professional practice includes overarching principles that express our values and standards that guide member conduct.


IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. Members shall act in accordance with these principles and shall encourage others within their organization to adhere to them.


IMA members have a responsibility to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility. Failure to comply may result in disciplinary action.

I. Competence
1. Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills.
2. Perform professional duties in accordance with relevant laws, regulations, and technical standards.
3. Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk.

II. Confidentiality
1. Keep information confidential except when disclosure is authorized or legally required.
2. Inform all relevant parties regarding appropriate use of confidential information. Monitor to ensure compliance.
3. Refrain from using confidential information for unethical or illegal advantage.

III. Integrity
1. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts of interest.
2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
3. Abstain from engaging in or supporting any activity that might discredit the profession.
4. Contribute to a positive ethical culture and place integrity of the profession above personal interests.

IV. Credibility
1. Communicate information fairly and objectively.
2. Provide all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendations.
3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.
4. Communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

Resolving Ethical Issues

In applying the Standards of Ethical Professional Practice, the member may encounter unethical issues or behavior. In these situations, the member should not ignore them, but rather, should actively seek resolution of the issue. In determining which steps to follow, the member should consider all risks involved and whether protections exist against retaliation.

When faced with unethical issues, the member should follow the established policies of his or her organization, including use of an anonymous reporting system if available.
If the organization does not have established policies, the member should consider the following courses of action:

  • The resolution process could include a discussion with the member’s immediate supervisor. If the supervisor appears to be involved, the issue could be presented to the next level of management.
  • IMA offers an anonymous helpline that the member may call to request how key elements of the IMA Statement of Ethical Professional Practice could be applied to the ethical issue.
  • The member should consider consulting his or her own attorney to learn of any legal obligations, rights, and risks concerning the issue. If resolution efforts are not successful, the member may wish to consider disassociating from the organization.


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