Accounting: Ethics and Company Essay

Submitted By dsadrack
Words: 1592
Pages: 7
Open Document
Ethical Dilemma Camp industries is involved in a lawsuit towards the company. The lawyers in this case felt as though they will not be winning the case and will lose a approximated amount of thirty million dollars. Now when the company is told that will be close to the amount due to be owed, is when the problem of when to report the amount came into play. In a case like this it is rare for a company to accrue the amount on loss contingency without knowing the true and full amount. In accrual based accounting the measuring of the entity’s and resource sacrifices during the period, regardless of when the cash is gathered or paid out (Spiceland, G-0). When the company talks about a loss contingency it is a uncertain situation that involves potential loss depending on whether some future event occurs (Spiceland, G-1). When you look at this the question is to either put the loss in without knowing the amount, or wait until the full amount on the settlement is reached? The ethical dilemma here is when to report the amount when the full settlement of the lawsuit is reached or to report the accrual loss contingency of the amount estimated. This is ethical problem because the person who is posting it and person reviewing it are faced with more then one option on what to do with the loss. No one person knows the right decision right away and that is what makes this a huge dilemma with the company. Now the stakeholders in this situation are the chief financial officer, the CEO, and the person posting the amount to the books. The CFO is the one who looks over all the decisions made by everyone under him. So if he is wrong by what he says to do then it is on him for the wrongful reporting of the amount. This could result in a audit of the companies financial books and if there is a big enough problem then everyone involved is under review. This is where the CFO, CEO, and person reporting it have an ethical dilemma because all three will have their jobs examined to see if they made the right choice. It not only affects the company and its financials but also the stakeholders and the jobs they hold as well. There is a huge list of values that go along with this case, the one that stands out to me the most would be responsibility to users of financial statements. The people who are not only reporting the statements, but also the people who look them over should know how and what to look for. They should know the rules and what should be reported when, so there is no reason to question what is being done. Just like in this case they know that the right kind of posting is going to come down to the responsibility of the reporter and higher ups. Honesty is a huge value with his kind of reporting as well, they have to be honest to the company and its statements. If they are dishonest it can lead to again job reviews and also criminal punishment in the end. So if the reporter or the CFO are dishonest about the amount or where it should be then it becomes an issue of the honesty policy. Loyalty to the company I think plays the biggest role in this one. If someone loves the company and their job then they are going to be loyal to the statements as well, and know what is right and wrong. Values play a huge role in this case because it’s all on how they like the job they have and the company and honesty to follow with it. The courses of action that I would consider besides just this one would be to look at if there is a possible case of having to report less or more. Then look at if it would really affect the financials for the year and for that period as well. I would look at the course of action of seeing if that lump sum was going to be taken at one point and would wait until the settlement was agreed upon. Then I would report it to the financial statements on the lump sum amount. But then there is a way to have that money be on a payment option for the company as well. SO if it is on the payment option then you have to show for
Show More

Related Documents: Accounting: Ethics and Company Essay

The Role Of Managerial Accounting

* Financial functions This position will also focus on the determination and accumulation of products, processes, and service costs (cost accounting). A managerial accountant will be the individual to take the proactive approach of tackling business and economic troubles by planning, organizing, and controlling business activities in order for us the company to achieve the desired goals. An internal managerial system is used to provide the financial information required in order for management…

Words 646 - Pages 3

Analyse the Problem of Accounting Fraud in a Listed Company and Evaluate Possible Solutions Essay

Analyse the problem of accounting fraud in a listed company and evaluate possible solutions In 2001, Enron Corporation went into bankruptcy due to the disclosure of false information in its financial statements. Similarly, when Lehman Brothers collapsed there was no evidence that it had ever publicly disclosed certain detrimental accounting information. Cases of accounting fraud such as these have become increasingly serious. Accounting fraud can result in creditors and stockholders losing confidence…

Words 1770 - Pages 8

vthai assignment1 Essay

impartial/objective. If management were to function as the audit committee, the company would be at risk to managers shopping around for auditors that produce favorable audit opinions, or also known as "Opinion shopping", which is also prohibited by the SEC. ID1-7: Fortune magazine ran an article titled “New Ethics or No Ethics? Questionable Behavior Is Silicon Valley’s Next Big Thing,” which recounts stories of Internet companies that aggressively inflate their revenues, delay the recognition of expenses…

Words 889 - Pages 4

Ethics in Accounting Essay

Do Ethics Classes help Accounting Students Abstract This paper describes a case study of the experiences and attitudes of Accounting educators and students regarding the effects of ethical courses for there major. I present professional educators options on how the classes should be implemented, and interviews with Ole Miss alums with their degrees in Accounting. The purpose of the study is to gather information concerning the content and reliability in university ethics courses. I report…

Words 2006 - Pages 9

Enron - Ethical Dilemma Essay

dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject…

Words 1139 - Pages 5

Essay about Review of Ethics Revision 3

Review of Accounting Ethics Kendra P. Scott Financial Accounting 557 Dr. Bryan Womack Strayer University July 27, 2014 Ethical Behavior When principles and standards are typically set in place for ethical behavior policies can be created from these standards. All companies and organizations have an ethics code or policy which is updated when the company deems it necessary. Ethics are a system of moral principles which exist in culture and the work environment consisting of the rules…

Words 1343 - Pages 6

Ethics Paper5

society. "The purpose of ethics in accounting and business is to direct business men and women to abide by a code of conduct that facilities public confidences in their product and services" (Dr. Smith, L Murphy). The accounting profession has a long history of contributions to the efficient functioning of business operations, the capital market system and the economy in general. In the wake of corporate scandals and a struggling world economy, we look back at the accounting scandal at Enron, from…

Words 833 - Pages 4

Ethics in Accounting Essay

Ethics in accounting is of utmost importance to accounting professionals and those who rely on their services. Certified Public Accountants (CPAs) and other accounting professionals know that people who use their services, especially decision makers using financial statements, expect them to be highly competent, reliable, and objective. Those who work in the field of accounting must not only be well qualified but must also possess a high degree of professional integrity. A professional's good reputation…

Words 1140 - Pages 5

Notes On Managerial Accounting

Chapter 1-1 CHAPTER 1 MANAGERIAL ACCOUNTING Managerial Accounting, Fifth Edition Chapter 1-2 Study Study Objectives Objectives 1. Explain the distinguishing features of managerial accounting. 2. Identify the 3 broad functions of management. 3. Define the 3 classes of manufacturing costs. 4. Distinguish between product and period costs. 5. Explain the differences between a merchandising and a manufacturing income statement. Chapter 1-3 Study Study Objectives Objectives 6. Indicate…

Words 2485 - Pages 10

Essay on Auditing Individual Project

subject: Ethics in Accounting date: Ethics are the means by which people judge what is right and wrong. They are a part of everyday personal life, as well as business or work life. Ethics can become a problem if people have different ideas of what is right and what is wrong. Ethics come into play with companies when decisions have to be made and people do not agree on something, which can lead to a dispute. So for the company’s sake, it is important for everyone to be on the same page. Ethics lead…

Words 1498 - Pages 6