Memo on Budgeting and Planning

Memo – Ethics and Budgeting
Author’s Name
Institutional Affiliation
Course Code and Name
Professor’s Name
Date
Memo – Ethics and Budgeting
To: Bernice Mayfield
From: Henri Duvall
Date: 6th December 2022.
Subject: Budgeting and Planning.
Southeast region’s director, Max Green, should care pertaining to the budgeted net income level. He knew that the planned budgeted income was very high and unattainable. For instance, he told Duvall that ten new stores would be opened in the coming year and that the budget need to reflect the start-up expenses. Green was aware that no region had started over 7 stores and that he would be lucky to open 5 stores. The only thing that the director did not want to compromise is getting higher bonuses. In this light, the actual budgeted outcomes ought to remain below the budgeted net income. That was why Green instructed Duvall to make adjustments to the budget with an across-the-board rise of 4%. The budgeted net income was decreased by $250,000 (Davis & Davis, 2020). As such, Green only cared about the budgeted net income to realize more financial benefits.
Bernice Mayfield, the firm’s owner, would not be happy if he knew Green’s actions. Mayfield replaced the bottom-up budgeting process with a top-down one that affects directors’ bonus compensation (Davis & Davis, 2020). Although directors participate in the budget creation process, manipulating the budgeted net income is not allowed. Mayfield might have changed the budgeting process to motivate directors. However, Green was taking an advantage of the budgeting process so that actual outcomes can be higher than the budgeted net income. That way, he was sure that his bonus compensation would be high. Moreover, employees obeyed Green’s orders without questioning since he retaliated against those who defied his guidelines. On that note, Mayfield would likely suspend or fire Green for manipulating the budgeted net income to realize more bonus compensation.
Duvall had nothing to lose, as long as, he obeyed Green’s ...