Legality and Ethicality of Corporate Governance

695 Words3 Pages
Frank Campbell, the director of United Thermostatic Controls’ Southern Division, was unsatisfied with the division did not meet the targeted budget for 2010. He investigated and found a way to increase the sales revenue by sending shipments out to his customer before the schedule delivery date which violated the FOB shipping point. Campbell had found a way to increase sales by sending out two shipments to his customers; these shipments were not supposed to deliver until 2011. The customers had specified when they wanted their merchandise to be ship. Campbell had sent the merchandise and reported the sales revenue in the financial report instead of offering a discount to the customer so that the merchandise can be recorded and shipped in 2010 instead of 2011. It wasn’t until the audit committee had looked at the reports, the questions arise. The internal auditors had learned that there was pressure put on the accounting department by Campbell. The main concern of the auditors was the reporting of the two shipments valuing $150,000 (Mintz, 2011). There was not a written agreement between United Thermostatic Control and the customers, so therefore, the shipments should not have been sent. Campbell had been reassured by Lorenzo, Executive Vice President of sales and marketing, that there is nothing wrong with recording the revenues in 2010, however, this was still a concern for the CPA, Tony Cupertino. The legality of the events was within the laws of federal, state and local government. Reporting the revenue properly after sending out the shipments would not have violated the FOB shipping point. Although the shipments were sent before they were scheduled to, Cupertino was uncertain whether to pursue this issue any further. The criteria by which Sarbanes-Oxley would apply are the assessment of internal controls under Section 404 of SOX; which give responsibility to the

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