The accounting adjustments contemplated by John Winslow are unethical because they will result in intentionally overstating income by understating the cost of goods sold. The specific standards of ethical conduct for management accountants violated by Winslow are as follows:
Competence. By making the accounting adjustments, Winslow violated the competency standard by not preparing financial statements in accordance with technical standards.
Integrity. Winslow violated the integrity standard by engaging in an activity that prejudiced his ability to carry out his duties ethically, and by engaging in an activity that appears to be a conflict of interest.
Credibility. By overstating the inventory and reclassifying certain costs, Winslow has violated the credibility standard. He has failed to communicate information fairly and objectively and has failed to disclose all relevant information that would influence the users’ understanding of the report.