Donna Franks, an accountant forSouthern Technologies Corporation, discovers that her supervisor, Elise Silverton, made severalerrors last year. Overall, the errors overstated the company’s net income by 40%. It is not clearwhether the errors were deliberate or accidental. What should Franks do?
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Donna Franks, an accountant for
Southern Technologies Corporation, discovers that her supervisor, Elise Silverton, made several
errors last year. Overall, the errors overstated the company’s net income by 40%. It is not clear
whether the errors were deliberate or accidental. What should Franks do?
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- THE CONFUSED ACCOUNTANT Yvonne Pillar is a young accountant who came from a poor family. She was recently hired by a big company called Chameleon Co. When it was time to audit the accounting books of the company, Yvonne was instructed by her boss to manipulate the numbers in order to reduce taxes the company will have to pay the government. The company official said that if she would not heed the command, she would be terminated. The employment condition that time was really tight and the chances of finding another job are very minimal. Questions : 1.)if you were Yvonne Pillar, will you obey your boss? Why or why not? 2.) Are morally obligated to follow an order that is illegal?Peter Pan is a young accountant who came from a poor family. He was recently hired by a big company called PetraPak. When it was time to audit the accounting books of the company, Peter was instructed by his boss to manipulate the numbers in order to reduce the taxes expense the company will have to pay the Bureau of Internal Revenue. The company official said that if he would not heed the command, he would be terminated. The employment condition that time was really tight and the chance of finding another job is very minimal. Question: If you were Peter Pan, will you obey your boss? Why? Or why not?Charlie Brown, controller for Kelly Corporation, is preparing the company's income statement at year-end. He notes that the company lost a considerable sum on the sale of some equipment it had decided to replace. Since the company has sold equipment routinely in the past, Brown knows the losses cannot be reported as an unusual item. He also does not want to highlight it as a material loss since he feels that will reflect poorly on him and the company. He reasons that if the company had recorded more depreciation during the assets' lives, the losses would not be so great. Since depreciation is included among the company's operating expenses, he wants to report the losses along with the company's expenses, where he hopes it will not be noticed. Answer the following questions: (a) What are the ethical issues involved? (b) What should Brown do?
- Charlie Brown, controller for Kelly Corporation, is preparing the company’s income statement at year-end. He notes that the company lost a considerable sum on the sale of some equipment it had decided to replace. Since the company has sold equipment routinely in the past, Brown knows the losses cannot be reported as an unusual item. He also does not want to highlight it as a material loss since he feels that will reflect poorly on him and the company. He reasons that if the company had recorded more depreciation during the assets’ lives, the losses would not be so great. Since depreciation is included among the company’s operating expenses, he wants to report the losses along with the company’s expenses, where he hopes it will not be noticed. Instructions a. What are the ethical issues involved? b. What should Brown do?As the controller of Take No Prisoners Perfume Company, you discover a misstatement that overstated net income in the prior year’s financial statements. The misleading financial statements appear in the company’s annual report, which was issued to banks and other creditors less than a month ago. After much thought about the consequences of telling the president, Jeb Wilde, about this misstatement, you gather your courage to inform him. Jeb says, “Hey! What they don’t know won’t hurt them. But, just so we set the record straight, we’ll adjust this year’s financial statements for last year’s misstatement. We can absorb that misstatement better in this year than in last year anyway! Just don’t make such a mistake again.” Instructions Who are the stakeholders in this situation? What are the ethical issues in this situation? What would you do as a controller in this situation?Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located at Tesano. Miss Nsiah does not qualify for a practicing certificate and so she does not provide audit serviceto the client. This is her first year of preparing financial statements for the firm. When compiling the most recent accounts, she detected some material errors in the previous financial statements. It seemed that theaccounts were based on incomplete records as certain costs were excluded, either deliberately or because records were not maintained.The Chief Executive Officer of the firm has also requested some additional work to be completed on a complex tax issue. However, she has no prior experience and does not feel competent to the work. The CEO would also like her to provide an audit opinion as they are planning to apply for funding from a bank and the bank would like some further assurance.Required:With reference to Code of Ethics for accountants, discuss the ethical…
- A CPA is performing review services for a small, closely held manufacturing company.As a part of the follow-up of a significant decrease in the gross margin for the currentyear, the CPA discovers that there are no supporting documents for $40,000 of disbursements. The chief financial officer assures her that the disbursements are proper.What should the CPA do?(1) Include the unsupported disbursements without further work in the statementson the grounds that she is not doing an audit.(2) Modify the review opinion or withdraw from the engagement unless the unsupported disbursements are satisfactorily explained.(3) Exclude the unsupported disbursements from the statements.(4) Obtain a written representation from the chief financial officer that the disbursements are proper and should be included in the current financial statements.Read the following scenarios and answer the questions that follow: i) A young graduate has just been employed as the Receivable Officer, responsible for billing of customers, maintaining customers’ accounts and preparing monthly control accounts. Management has found out that the officer has not been straightforward and honest in the discharge of his duties. He was found to be “cutting corners” and connives with the customers to understate their bills and accounts in order to enrich himself. Management has fired him sadly. ii) You met a friend in church recently and she was looking very flashy, showing clearly that she got a good job. Upon a short conversation, she indicated that she is blessed to be in charge of the payroll of the company. In fact, she told you exactly how much your four other mates working in that organisation are earning. She went further to inform you that the new car driven by Jojo, a popular mate back in school, was a loan of GHc100,000 he took from a bank and…As the auditor for Company A, you discover that a material sale ($500,000 sale; cost of goods of $300,000) was made to a customer this year. Because of poor internal accounting controls, the sale was never recorded. Your client makes a management decision not to bill the customer because such a long time has passed since the shipment was made. You determine, to the best of your ability, that the sale was not fraudulent. Using the framework for ethical decision making, determine whether the auditor should require either a recording or a disclosure of the sales transaction. Instructions: Using the framework for ethical decision making, determine whether the auditor should require either a recording or a disclosure of the sales transaction. Please make sure to use at least 100 words in your response. Once you give your response, please respond to at least two of your peers using at least 50 words in your responses. Remember to follow the netiquette guidelines found in the course…
- Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located at Tesano. Miss Nsiah does not qualify for a practicing certificate and so she does not provide audit service to the client. This is her first year of preparing financial statements for the firm. When compiling the most recent accounts, she detected some material errors in the previous financial statements. It seemed that the accounts were based on incomplete records as certain costs were excluded, either deliberately or because records were not maintained. The Chief Executive Officer of the firm has also requested some additional work to be completed on a complex tax issue. However, she has no prior experience and does not feel competent to the work. The CEO would also like her to provide an audit opinion as they are planning to apply for funding from a bank and the bank would like some further assurance. Required: With reference to Code of Ethics for accountants, discuss the…Harmony is the Senior accountant of a Bank. Junior accountants of all the branches reportto her. While preparing for the final quarter sales report, she finds that two out of the fourbranches have failed to achieve the sales targets for the second consecutive quarter.According to the company policy, the branches that fail to achieve targets in twoconsecutive quarters have to be closed. Harmony feels sad for all the people losing theirjobs and decides that she will overstate the sales revenue generated by every branch andreport manipulated figures in the financial statements. Answer the following questions. Describe Harmony’s actions from ethical standpoint. Is she doing the right thing? What can be the consequences of Harmony’s actions. What are the risks involved? What would you suggest to Harmony? (please cite paragraph according to the MLA citation? Please note this is not an essay.Margaret is the manager of a medium-size company. A few years ago, Margaret persuaded the owner to base a part of her compensation on the net income of the company. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet?
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