This ethics case is centered on Sports World, Inc. which is a large retail chain that sells sporting goods. There are a few unethical situations presented in the case that will be discussed throughout this paper. The first one is when Sports World recognizes $15 million of earnings prematurely when it should have been recorded as $15 million of unearned revenue because the shipping company failed to ship $15 million dollars of merchandise before the months end. Another unethical situation is when Sports World reverses $2 million of advertising expense by setting up an asset account called prepaid advertising that will be expensed in January 2014 and February 2014. Finally, another situation that could possibly have ethical implications is the accountant’s close relationship with someone who works for the company’s independent auditing company.
Stakeholders
• Stockholders: stockholders are one of the primary stakeholders of any public company and it is no different with Sports World. The stockholders are relevant to this ethics case and to Sports World because the stockholders have invested money into the company in exchange for ownership. The success or failure of the company directly relates to the success or failure of the stockholders investment. As of late Sports World’s stock price and investor satisfaction has been on the decline because of poor earnings (and earnings per share) which is a bad sign for the ultimate success of the company. So, to improve its earnings and satisfy the stockholders (and The Board of Directors), Sports World’s officers set up an adjusting prepaid advertising account in order to match the cost of the advertising campaign with sales. This wrongful adjustment will improve sales which would ultimate...
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... banks obligations as well. While it may be hard to restructure their loan covenants with the bank while the company is in a poor financial position it is a better alternative than committing unethical accounting decisions.
Another alternative to the second situation where Sports World recorded the $15 million as earnings would be to record the $15 million as unearned revenue instead and recognize the revenue in January when the merchandise is shipped. The CEO could meet with the Board of Directors and discuss with the board why the officers should still receive their benefits because it was not their fault that they did not meet their earnings goal it was the shipping company’s fault and the earnings will be recognized the following month anyway. Also, Sports World would be adhering to the AICPA code of conduct and operating in an honorable and responsible way.
Case 1: In this case. As a certified public accountant, Erickson oversaw and initiated an arbitrary adjustment to increase cash and decrease accounts receivable. Also, Erickson signed Form 10-K with full knowledge that the financial statements include therein incorporated entries misstating revenues. As we can see from this case, Erickson’s behavior not only violate the Business and Professions Code, Division 3, Chapter 1, § 5100(g) and (i), but also against the ethical theories.
The first blatant ethical issue in the Adelphia scandal stems from the idea that the Rigas family used corporate money for personal use. Nearly $12.8 billion was used to start construction on a personal golf course on their own private land and even more to cover the expenses of the use of the company aircraft for personal reasons. The use of this money was then hidden thro...
William Evan and Edward Freeman, in their essay “A Stakeholder Theory of the Modern Corporation,” argue that the objective of a company and its managers is not only to maximize profit for its owners and stockholders, but also to balance the benefits received or losses incurred by other stakeholders—employees, suppliers, customers, and the local community, all of whom may be influenced by company decisions. As the owner of MSO, your aim is ostensibly to maximize profits for yourself, but unlike most other indicted CEOs, you have not tried to obtain personal gains at the expense of the stakeholders of your enterprise. Rather, the charges that have been brought against you are for your dealings with another company; in this day and age where investors bemoan the lack of ethics of CEOs who use the power of their position in the boardroom to achieve selfish gains at the expense of their own company and its stakeholders, the charges of insider t...
The vignette described a woman who comes in for a session in an agitated state. The psychologist has worked with her for a few weeks and she was not overtly suicidal or homicidal. On this visit, the psychologist decided to refer her to an inpatient due to her becoming unreliable and taking 17mg of Xanax in 30 hours instead of 2.5mg prior to her appointment.The decision making process for this vignette is very important because of the dilemma involved. The ethical decisions-making process I am going to engage in will be the Canadian Code of Ethics for Psychologist and the decision- making process that accompanies it.
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
When I was working as a Customer Service Representative in the Bank, one of my responsibilities was to supervise the tellers. I was friends with two of the tellers working there at the time. We used to go out together outside of work and had great time. At some point I started noticing that they are being too friendly with each other and acting inappropriate for a professional environment. I decided to confront them and they confessed to me that they were dating. That is when I realized that I was faced with an ethical dilemma.
Ethics is a branch of philosophy that deals with the moral principles and values that govern our behavior as human beings. It is important in the human experience that we are able to grasp the idea of our own ethical code in order to become the most sensible human beings. But in that process, can ethics be taught to us? Or later in a person’s life, can he or she teach ethics the way they learned it? It is a unique and challenging concept because it is difficult to attempt to answer that question objectively because everybody has his or her own sense of morality. And at the same time, another person could have a completely different set of morals. Depending on the state of the person’s life and how they have morally developed vary from one human
In the following case, Luke is involved in a very perplexing conflict, or Ethical dilemma. This situation is an Ethical dilemma, and not just a regular “everyday” problem, because to Luke there might not be an obvious answer. He can also be thinking that both choices, keeping his commitments of confidentiality and telling his brother, Owen, are both correct things to do. If Luke tells his brother about the project, then he might concur with a theory known as Breach of confidentiality. “Breach of confidentiality occurs when someone gives away information that was supposed to be kept private.” (GENB4350 Online Lecture, Ethical Reasoning 1). By Luke breaching information that is supposed to be kept secret, he will betray the trust of his company
Human beings are confronted with numerous issues throughout his or her lifetime that would require him or her to examine the best action to take to avoid the damaging consequences. In most cases, individuals restrain his or her action to take into consideration the consequences that may lead to the right or wrong behavior. One’s ethical and moral standards are first learned at an early age from his or her culture, how he or she is raised, religious background, and social system. Scientifically, there are various ethical theories, such as the virtue theory, deontological ethics, and utilitarianism (Boylan, 2009). By understanding these theories one can compare, contrast and uncover the reasoning behind his or her ethical and moral standards.
Many ethical dilemmas are philosophical in nature, an ethical issue can be described as a problem with no clear resolution. In order to solve the issue or dilemma a consensus between the parties involved must be reached. There are several reasons to come to an agreement over an ethical dilemma, it is the basis for all aspects of personal and professional dealings. Each one of us is part of a civilized society and as such it is our responsibility to be rational, honest and loyal in our dealings with others. (Alakavuklar, 2012) states that individuals make decisions for different situations in business life involving various ethical dilemmas. Each time either consciously or unconsciously individuals may follow some ethical approaches
Unethical accounting practices involving Enron date back to 1987. Enron’s use of creative accounting involved moving profits from one period to another to manipulate earnings. Anderson, Enron’s auditor, investigated and reported these unusual transactions to Enron’s audit committee, but failed to discuss the illegality of the acts (Girioux, 2008). Enron decided the act was immaterial and Anderson went along with their decision. At this point, the auditor’s should have reevaluated their risk assessment of Enron’s internal controls in light of how this matter was handled and the risks Enron was willing to take The history of unethical accounting practic...
Accounting ethics has been difficult to control as accountants and auditors must keep in mind the interest of the public while that they remain employed by the company they are auditing. The accountants should take into account how to best apply accounting standards when company faces issues related financial loss. The role of accountant is crucial to society. They serve as financial reporters to owe their primary constraint to public interest. The information provided is critical in aiding managers, investors and others in making crucial economic decisions. An accountant is responsible for any fraudulent financial reporting. Some examples of fraudulent reporting are:
This essay will talk about the ethical standards and code of conduct in the accounting profession, in particular for CPA Australia, the importance of ethical education for accounting students, the importance for ethical financial reporting and also addresses ways to deal with conflicts that arise from ethical issues in the
Dowd (2016) runs above and beyond with the clarification to state accounting fraud incorporates the change of accounting records in regards to sales, incomes, costs and different components for a profit motive, for example, boosting organization stock prices, getting ideal financing or maintaining a strategic distance from obligation commitments. Dowd is of the feeling that covetousness, absence of straightforwardness, poor administration data and poor accounting interior controls are a couple of explanations behind accounting fraud. (Dowd,
Everyone in this world has experienced an ethical dilemma in different situations and this may arise between one or more individuals. Ethical dilemma is a situation where people have to make complex decisions and are influenced based on personal interest, social environment or norms, and religious beliefs (“Strategic Leadership”, n.d.). The leaders and managers in the company should set guidelines to ensure employees are aware and have a better chance to solve and make ethical decisions. Employees are also responsible in understanding their ethical obligations in order to maintain a positive work environment. The purpose of this case study is to identify the dilemma and analyze different decisions to find ways on how a person should act