The controller's objectives in this situation are to accurately reflect the state of the business; the president's request runs directly counter to this objective. c) The controller should not be concerned with Ruiz Co.'s growth rate. The duty of the controller is to record as accurately as possible the company's financial condition. Accuracy is the most important consideration for the controller. The firm's growth rate is the responsibility of other managers.

The controller's duty of care is owed to the shareholders, regulators and other parties who are affected by the accuracy level of the financial statements. The duty, however, is not to provide the shareholders with a level of growth or to manage their expectations. The duty of the controller is to accurately reflect the firm's financial state.

As such, the controller in this situation...

The request is made in bad faith, and does not accurately reflect the firm's financial circumstances. If there as an empirical basis for using the 4% figure, then the controller would be able to use that figure without violating his duty of care, but if the history of doubtful credit shows that the 2% figure is accurate, then the controller must use that figure in order to maintain ethical integrity. Therefore, the controller must refuse the president's request. If the president wishes to manage the expectations of the shareholders, this must be done through means that do not impact on the integrity of the financial statements. For the controller to comply with the president's request would mean violating professional codes of ethics as well, further lending credence to the fact that the controller must reject this request.