Legality and Ethicality of Corporate Governance Essay

757 Words4 Pages
Legality and Ethicality of Corporate Governance Frank Campbell, the director of United Thermostatic Controls’ Southern Division, was dissatisfied with the way the division had not met the targeted budget for 2010. He had found a way to make the sales revenue increase. By increasing the sales revenue for his division, Campbell would be satisfied. Campbell had found a way to increase sales by sending out two shipments to customers. These shipments were not to be delivered until 2011. The customers had specified the dates they wanted their merchandise. Instead of offering the customers a deal, Campbell sent the merchandise and reported the sales revenue to the financial reports. Assuming that this was okay, Campbell let it be. It wasn’t until the audit committee had seen the reports, the questions would 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). Since there was not an expressed written agreement between United and the customers, the shipments should not have been sent. Campbell had been reassured by Lorenzo, Executive VP of Sales & Marketing, that he seen 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. By reporting the revenue properly after sending out the shipments without violating the FOB shipping point, the generally accepted accounting principles (GAAP) were not violated. The revenue recognition principle was not violated. Cupertino had debated on whether to take his findings to the CFO, Walter Hayward. Although the shipments were sent before they were scheduled to, Cupertino was uncertain whether to pursue the issue any further. The
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