Company’s in the IPO process and newly public companies are not required to provide either a management assessment or an auditor attestation report until they file their second annual report with the SEC. While companies in the IPO process are not required to comply with these regulations, in order to prepare for these certifications and audit, it is important to establish, document, and monitor compliance of internal controls as early as possible. 2. One practice the LJB is doing right and should continue to do is the use of pre-numbered invoices. This prevents transactions from being skipped over or recorded more than once.
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.
Mr. Read guaranteed the company’s promissory note in payment for the stock. Ms. Read didn’t report the down payment of $200,000 and principal payments she received from MMP in her tax return, except for including the interest income from MMP’s installment promissory note in her tax return for 1988, 1989 and 1990. On Mr. Read’s side, he did not report any income with respect to Ms. Read’s transfer of MMP stock. The IRS treated the stock redemption as a sale exchange and claimed that the principal payments from MMP created a long-term capital gain on Ms. Read’s tax return. The IRS had no concerns about Ms. Read’s interest income under the installment promissory note reported in her tax return.
Many times companies break accounting procedures and falsify their financial statements in order to please both internal and external users. Even though this is a violation of the SOX act of 2002, corporations still chose to engage in these activities. The final thing we learned about is the ethical decisions made behind financial reporting. The AICPA Code of Professional Conduct was put in place to make sure companies have a standard to follow when creating financial statements. Legality Financial reporting activities and standards Earnings management has been used as the manipulation of the current standard of financial reporting established by G.A.A.P.
According to (LCB, 2013), “The goal of a regular gift is to demonstrate your respect for an individual and your commitment to creating or maintaining a relationship with them.” Basically, an actual bribe in China is considered as hard currency in red envelope. Although, the difference between bribery and gift is not significant, gift still convey the meaning of goodwill. Ethical defining As we discussed in class, ethical defined as more goodness than harm. Also, NES’s principle demonstrate its responsibilities to society and to the operating country. The gift-giving culture in China had already formed completely which is not because of NES’s wrongdoing and it is impossible to be changed just by one company.
As the case illustrated, there were dozens of serious and valid red flags that SEC was bombarded with by efforts made from Harry Markopolos. One alternative solution is for SEC to properly review the case itself, along with closely monitoring those assigned and affiliated with the case. From reading the case, it appears that one of the major flaw can be traced back from the audit work that was performed. It’s noted in the case that Bernie Madoff presented a purely fictitious financial statements to SEC for review and nothing alarming was discovered. Furthermore the case stated that there was actually no audit work that was done, and Madoff’s cousin was the sole practitioner conducting the audit.
Ethicality of accounting and auditing activities ETH/376 Ethicality of accounting and auditing activities United Thermostatic Controls is a manufacturing company that is publicly owned and markets residential and commercial thermostats (Mintz & Morris, 2011). As a publicly owned company, United’s common stock is listed and traded on the New York Stock Exchange (Mintz & Morris, 2011). The company is has different sales division and each division has different sale revenue targets that they have to meet and if the divisions do not meet the target the division managers will not bonus and share of corporate profits. Frank Campbell is the director of the Southern sales division; nevertheless the Southern sales regional economics is getting worse (Mintz & Morris, 2011). The pressure to accomplish the sales revenue target has created a stressful and unethical environment for Campbell.
Companies use managerial accounting internally to prepare and manage their business data. They contain guidelines through which accountants follow in their day to day activities. The ethical guidelines have been formed by the institute of management accountants. Organizations use this field in costing of their products and services, budgeting and anticipating for future sales. (Osmond, 2014) Accountants do not always follow the moral guidelines set out by the company’s managerial accounting and thus creating ethical problems within the business.
Research shows that the benefits of a highly defined mission statement are plentiful. A mission statement can be defined as a document which addresses both the employees of a company as well as its clients – outsiders (Tofftoy and Chatterjee, 2004). Therefore benefits gained by the company can be categorised as both internal and external. As the statement is written with this in mind, it must therefore not include any financial, market share or other goals specific to the business. Instead a mission statement should inspire understanding of what the company intends to achieve and how it is going to go about achieving it on both sides of the counter (Dust, 1996).
In addition a description of the Sarbanes-Oxley Act and its influence on accounting and financial decision making will be included. Professional Ethics in Accounting According to Mantzke (2005) “Ethics has always been significant for accounting professionals and the constituencies they serve. CPAs have developed a reputation as trusted business advisors; in part due to the general perception that accounting professionals behave ethically” (Incorporating Professional Ethics Throughout an Accounting Curriculum). The training that accounting professionals receives focuses on the details about account rules, and regulations as it pertains to the laws that govern account principles. What is absent from the curriculum is understand the Ethics involved in the same accounting principles.