ethics and financial reporting
After showing your analysis to the controller, he tells you to change the aging category of a large account from over 120 days to current status and to prepare a new invoice to the customer with a revised date that agrees with the new category. This will change the required allowance for uncollectible accounts from $180,000 to $135,000. Tactfully, you ask the controller for an explanation for the change and he tells you “We need the extra income, the bottom line is too low.” Required: In a 2-3 page paper, discuss the following: Consider what you have learned relative to ethics and financial reporting. What is the rationale for the calculations/process used to estimate the $180,000 uncollectible allowance? How do you think the misstatement of funds will impact the income statement and balance sheet? What is the ethical dilemma you face? What are the ethical considerations? Consider your options and responsibilities as assistant controller. Identify the key internal and external stakeholders. What are the negative impacts that can happen if you do not follow the instructions of your supervisor? What are the potential consequences if you do comply with your supervisor’s instructions? Who will be negatively impacted?[unique_solution]
After showing your analysis to the controller, he tells you to change the aging category of a large account from over 120 days to current status and to prepare a new invoice to the customer with a revised date that agrees with the new category. This will change the required allowance for uncollectible accounts from $180,000 to $135,000. Tactfully, you ask the controller for an explanation for the change and he tells you “We need the extra income, the bottom line is too low.” Required: In a 2-3 page paper, discuss the following: Consider what you have learned relative to ethics and financial reporting. What is the rationale for the calculations/process used to estimate the $180,000 uncollectible allowance? How do you think the misstatement of funds will impact the income statement and balance sheet? What is the ethical dilemma you face? What are the ethical considerations? Consider your options and responsibilities as assistant controller. Identify the key internal and external stakeholders. What are the negative impacts that can happen if you do not follow the instructions of your supervisor? What are the potential consequences if you do comply with your supervisor’s instructions? Who will be negatively impacted?