client manipulation of financial statements

client manipulation of financial statements

It has to our attention that an accountant has been manipulating some client information on financial manipulation. This memo is a reminder that clients’ information should hold responsible for producing concise and timely financial reports.

The financial manipulation was detected by investors who are in a relationship with the corporate client. The manipulation is through exaggeration of the current period earnings on the income statement that artificially inflates revenue. When the company’s operation was in a worse condition, this is where the tension on financial numbers did start. The manipulation happens through the release of the annual results that no one notices the change, but while studying the reports, the company auditors see a frequent move where he signals a warning. Due to company management being in bad terms with the auditors, thus created a strong influence, and so have to keep a close check.

Clients’ request for manipulation of financial their statements leads to an ethical dilemma in accounting. Explore whether the issues regulated by law or policy. Ethics in accounting is concerned with the moral choices and excellent work presentation, preparation, and disclosure of financial information. This problem comes through financial reporting that creates a scandal in accounting. The fraud financial reporting in accounting is through the misstatement of financial statements. The mistake occurs through the intent of misleading investors and maintain the company’s share. The misleading term of the financial report is due to the long term effect of the company’s stock price.

Financial reports result in the disclosure and leading to violation of the ethical errors and intentionally recording of this transaction in the manner that is per results in financial fraud reporting. Failure to disclose this information to investors can change their minds in investing in the company, thus leading to fraud reporting as well. It is essential to protect this information that would relate to the significant event of the investors.

Like other professions,accountants have responsibility for the users’ information on financial statements. They provide information on a wide range of users as for firms and individuals where at times may conflict .these information base, users make investment, finance, and make other decisions. The financial decision would, at the time, have more consequences in the lives of both the individuals and the economy as well; thus, this information is paramount and should be reliable and concise. Accountants tend to benefit more in the fraudulent transaction where he would get a bonus or even get a promotion.

Shareholders, employees, customers, family financers that are involved in the decision-making process of a company are affected by the dilemma. Corporate scandals that the company faces the legal boundaries and crosses the statutory limitation, poor decision making that hurts most stakeholders. All stakeholders who affect this situation meet, and the consequences of company activities and the policies of the company. The stakeholders expect a decent return on their investment, and corporation to pay them for the opportunity cost of investing in their firms. The compensation is through dividends bonuses and the bonus share where most promoters have small stocks.

In solving ethical dilemmas, some issues to consider are; One, you have to identify if there is a moral issue. Identify if the is conflict value of any profession.secondly, you have to identify the key issues and principles involved to help identify the means and limitation that are typically attached to the benefits. Lastly, implement a plan that utilizes the most appropriate skill and competences.

Stakeholders should try to communicate that would promote solutions to clearing the fraud information in a firm. Stakeholders would benefit more in the tradeoff activities as they would pay fewer costs. The most common action that should take is on the checking of the employer’s rights, cause harassment and discrimination, ensuring the legal right of an employee, and make the customer feel stable not to upset them.

In solving the dilemma, accountants should consider:

Make moral debate choices

Use the balance sheet approach

Engage people up and down of the hierarchy

Integrate decision making into strategic management

In conclusion, accountants should make sure to follow and conserve information to avoid manipulation. The organizing companies should also make a good relationship with the auditor to avoid the ethical dilemma on the information. Stakeholders also should maintain excellent communication with the company, and this is to enhance the best decision-making process through their firms.