Legality and Ethicality of Corporate Governance

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Legality and Ethicality of Corporate Governance Susan Meinket ETH/376 July 21, 2014 Professor Melanee Robertson Introduction This is a discussion evaluating the ethicality and legality of the United Thermostat Controls case listed in our reading. It will be determined whether any ethical issues or legal ones have been violated in this case. Legality and Ethicality of Corporate Governance – United Thermostat Controls Case United Thermostat Controls has four sales division and one of the sales divisions, Southern, is doing poorly as far as meeting the projected and budgeted numbers. The Sales Director started to look through purchase orders to see what he can ship out. This is something that my boss does as well. The company I work for invoices on the date of shipment therefore I do not see a legal issue with United Thermostat Controls doing the same thing. The Sarbanes Oxley Act pertains to United Thermostat Controls because they are a public company. This act states that management must certify the financial statements of a public company. Being that Frank Campbell is management, he certified that these transactions were accurate. Since they were actually shipped, this was not the issue. The issue that comes into play is when the auditors noticed that the customers specified a ship date of the following year. Since there was nothing in writing from the customer to move up the date, this is what the auditors find as manipulation of revenue. All this information was brought to the attention of Director of Internal Auditing who information Frank Campbell that what was done was well inside the federal, state and local laws. Basically it comes down to whether this was an ethical decision or not. Who benefited from the recording of revenue? The financial benefits of this decision was definitely felt by both internal and external stakeholders. The

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