Alaura, Monica Feilane B.

BSMA-3 ACCTG233 8/09/2023

1. What is the management accountant’s responsibility under the IMA Statement of Ethical
Professional Practice in situations like this?
In cases like the General Motors (GM) ignition switch failure case, the management
accountant's duty aligns with the IMA (Institute of Management Accountants) Statement
of Ethical Professional Practice. According to the IMA's standards, management
accountants must act honorably and objectively, uphold their expertise and discretion,
and act in the public's and their organization's best interests. In this situation, the
management accountant must ensure that financial data and reporting appropriately
reflect the potential liabilities and risks associated with the fault when a flaw or safety
concern is found in an organization's products. This includes informing top management
of relevant details so that prompt, appropriate action may be taken to solve the problem,
ensuring accountability and honesty.

2. Why do you suppose there was such a delay in the announcement of recalls?
There were several reasons for the delay in announcing the recalls of GM vehicles with a
defective ignition switch. Corporate culture, legal concerns, and a lack of urgency in
solving the issue are just a few potential contributing variables, even though precise
causes may not be definitively established. GM's corporate culture may have prioritized
cost management and reputation management more than consumer culture.
Additionally, the delay might have been caused by legal issues, such as potential liability
and the expense of recalls. Further, it's possible that the problem went unnoticed or that
there was reluctance to accept responsibility for prior errors. A complex interaction of
these factors could have contributed to the delay in recall announcements.

3. What would be the effect of the delay on the value of the GM brand?
The GM brand's value suffered due to the prolonged delay in announcing the recalls of
the ignition switch defect. The delay primarily affected GM's credibility and reputation
with customers and the general public. The credibility and goodwill of the brand were
undermined by the revelation that GM was aware of a severe safety concern for almost
a decade without doing anything to address it. Customers may have lost faith in the
dependability and safety of GM automobiles as a result, which may have affected their
willingness to buy GM products. Additionally, GM's financial performance was
significantly impacted by the financial fallout from the recalls and the related lawsuits,
which in turn had an effect on the stock price and investor confidence.