a) What, if any is the ethical issue involved? b) Is any stakeholder harmed if Dick Wright’s preference is used? c) What should Sheryl Conan do? Concepts for Analysis CA 9-2 The ethical issue involved is the accountant is responsible to provide fair and complete financial information. If Sheryl Conan uses the direct method as her supervisors wants her to it will distort the cost of goods sold and hides the decline in market value.
It will be a violation of your personal ethics to overlook this error and falsify information to cover it up. You could be the one to lose your job. Gena Schmitt could lie and say that you covered up the whole transaction by yourself and you would be the one taking the fall. B). The ethical considerations in this case include violation of internal controls, falsifying the bank statement and deposit transactions, and lying.
An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are: • Remoteness of information a. Owners (stockholders) divorced from management b. Directors not involved in day-to-day operations or decisions c. Dispersion of the business among numerous geographic locations and complex corporate structures • Biases and motives of provider a. Information will be biased in favor of the provider when his or her goals are inconsistent with the decision maker’s goals.
For an audit firm given management function advice o their audit clients it could threaten the auditor’s independence by having to evaluate the work of someone that they recommended. With the audit firms giving the financial information design and implementation service they would be forced to evaluate the accounting system that they helped set for the audit client. This goes with the Bookkeeping and Accounting record services because the audit firm would lose their independence by having to evaluate these statements that they helped prepare, so therefore, they would be an internal auditor instead of an external auditor like they should be. 3. I believe
Analyze the ethical dilemma faced by Antonio The ethical dilemma that Antonio faced was weather to report the issue to the proper corporate officers himself, have Kevin Pfeiffer make his own decision regarding the issue, or ignore the issue altogether because the insurance proceeds will benefit the organization as a whole. What amplifies the dilemma is that there is no guaranteed result of either of the choices. If Antonio reports the issue to the insurance company, an investigation will be initiated and Antonio will put not only his job in jeopardy, but Kevin’s job as well. Create two strategies for addressing the situation at hand Antonio can make a decision using the utilitarian approach. The utilitarian approach is a strategy which emphasizes that the
Case 1.12 3. A “peer review” is an examination of an accounting firm’s quality control system and its compliance with the requirements of that system by one or more accounting professionals. Because Friehling & Horowitz’s audits of Madoff Securities were, in fact,” “sham audits”, then a thorough peer review would have revealed that those audits were false and misleading. The resulting peer review report filed with the relevant regulatory or oversight body would very likely have resulted in Friehling & Horowitz Being disqualified as Madoff’s audit firm. 4 Three conditions that are usually present when financial fraud occurs is the fraud risk triangle, the existence of an incentive and/or pressure to commit a fraud, the opportunity to commit a fraud is present (typically due to ineffective internal controls), and the ability to rationalize fraudulent conduct on the part of the given or potential fraudster.
Brian Crowe MGMT 368 Utilitarian Paper The Ford Pinto Case The best way to describe this case using the utilitarian principles and ethical business practice would be to consider the good and bad consequences for everyone that this action would affect. Unfortunately when it comes to business it is very hard for executives to make a good ethical business practice base on utilitarian principles and act morally because business seek to make a profit. Business will use a cost-benefit analysis in order to help them weigh the bad and the good consequences of performing a certain action as it relates to itself. On the other hand a utilitarian analysis, as an ethical point of view, weight the good and bad consequences on everyone affected (DeGeorge). In 1970 Ford Motor Company launched their new line of automobile called the Ford Pinto; they used a cost-benefit analysis based strictly on how the consequences will affect themselves as a business and not as an ethical analysis.
Nonetheless, Dell has a few reservations about illogical and impractical approaches proposed by the board. The company believes that stock options award should be regarded as compensation; however this understanding should not be exposed as an expense to the company, once this type of compensation is related to an equity distribution rather than using the company’s assets. Concerning the fair value, Dell does not agree with the presented methods of how to measure the fair value. For example, the lattice model would interfere with the understanding of the subject by the user of financial statements. Another disagreement between FASB proposal and Dell believes is related to the method of accounting for income taxes.
ACC2366 Auditing Principles and Procedures | Accounting/Auditing Scandal Part #2 | The Downfall of Nortel Networks | 2/9/2014 | Many professional bodies employ various methods to ensure that the profession and those members that belong to it have a framework within which to operate. The most common techniques include employing an ethical principles framework as well as rules of professional conduct. The accounting scandal that befell Nortel could have been avoided had certain ethical principles not been violated. As well, certain rules of professional conduct were not followed with regard to the audit of Nortel’s financial statements. While Deloitte & Touche were not charged with criminal wrongdoing, perhaps their integrity would not have been questioned if better care had been taken to observe the guidelines set out for the auditing profession.
This paper will look into how IAS was possibly obeyed or violated by the company in relation to what in general a company should behave in the preparation of financial statements for users. 2. Analysis and Discussion 2.1 What are the issues surrounding recognition and measurement of elements in the financial statements? The issues surrounding the recognition and measurement of elements in the financial statements would normally pertain to those that would not comply with the requirements of international accounting standards on recognition and measurement of accounting elements. Before the accounting elements become part of the financial statements required from companies particularly the publicly listed ones, a transaction or event should comply first with the standards’ requirement on measurement.