What do you think of when you hear the term “accounting.” What accounting information do you or your family need in managing the finances (such as information for preparing income tax returns, budgeting everyday expenses, applying for personal loans, mortgage loans, or college loans, etc.).
Tech-Smart Computer Company recently discovered a defect in the hard disks installed in its model R24 computer. The hard disk head in these units retracts too violently whenever the computers are turned off. As a result, the hard disks are destroyed after the computer is turned on and off approximately 500 times. Tech-Smart has sold 4,000 model R24 computers nationwide.
The marketing department at Tech-Smart contacted most of the 4,000 owners of the model R24 computer and discovered that 20 percent (or 800) use their computers in businesses that operate 24 hours per day. These customers never turn their computers off; therefore, the defect should not damage their hard disk units.
Judy Govan, Tech-Smart’s controller, has been asked to determine the cost to correct the hard disk problem and recommend a course of action. After studying the marketing department’s report, Judy decides to recommend that Tech-Smart replace the hard drives only in the 3,200 units used by customers who actually turn their computers off.
Did the accountant act ethically, please support your answer.
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