Real-Life Communication
Certified management accountants pride themselves on their people
skills. As managers and accountants, they must be able to communicate complex
financial information to their supervisors in easy-to-understand language.
"CMAs
need skill in the area of communications," says Jim Horsch, a CMA with a power
company. "They have to be able to listen and to communicate their recommendations.
They have to provide the support to help management make good decisions."
Let's
test your ability to communicate.
You're a CMA with a large electrical
company. The president of the company wants to expand one of your equipment
lines, and to do so he'll need a hefty bank loan.
You contact the bank
manager about getting a loan application. She says you'll need to prepare
a financial statement that summarizes your assets (property and equipment)
and liabilities (debts). You will also need to predict the impact of expanding
the lines -- what profit will the company gain from the expansion?
The
statement sounds a lot like an audit. An audit is when a qualified accountant
examines a company's financial statements and determines if they fairly represent
the financial position of the company. This is a job for other accountants,
not a CMA.
You ask the bank manager, but she says not to worry -- you
don't need an auditor in this situation. Still, you decide to look over your
professional association's code of ethics on relations with the public, just
to be sure.
Read through the following sections to find out if you
can prepare public financial statements without an auditor. If you can prepare
the statements, what are the conditions under which you can do so? If you
can't, then explain why not.
Code of Ethics for Management Accountants
1.2
Relations With the Public
1.2.1
Subject to any state
legislation, a certified management accountant may offer his or her services
to the public as a management accountant or cost consultant -- either as a
proprietor, a partner, director, officer or shareholder of an incorporated
company, and may associate with non-members for this purpose. A member associated
with these businesses must abide by the rules of professional conduct of the
society. Certified members associated with these businesses may use the initials
CMA on the letterhead, professional cards or announcements in a public advertising
forum.
1.2.2
No certified member shall use the designation
CMA when signing an audit certificate, but they may use the designation CMA
when signing financial statements prepared without audit, provided that the
fact that no audit was performed is clearly noted thereon as follows:
I
have prepared the accompanying balance sheet and income statements from the
books and records of the company and from information given to me. I did not
perform an audit of the accounts and, accordingly, am not in a position to
express an opinion on these financial statements.
1.2.3
No
member, unless a certified member, shall direct attention to his or her membership
in the society on his or her letterhead, nameplates, professional cards or
announcements.
1.2.4
In preparing the financial statements
or expressing an opinion on financial statements that are designed to inform
the public, a member shall disclose all material facts known
to him or her so as to make such financial statements not misleading, will
require all and sufficient information to warrant expression of opinion and
will report all material misstatements or departures from generally accepted
accounting principles.
In a presentation of a forecast of future results,
a member will indicate the degree of reliability and precision of such forecast
to avoid any misleading interpretation of such forecast.
1.2.5
It
is deemed discreditable conduct on the part of a member if he or she improperly
uses confidential knowledge of a client or an employer's affairs.
1.2.6
A
member is expected to treat as confidential any information obtained by him
or her as to the affairs of his or her clients. It is his or her duty to inform
the client of any business connections, interests or affiliations that might
influence his or her judgment or of which the client might reasonably expect
to be informed.