Ethics in Accounting

Published: 2021-07-06 06:41:26
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Category: Human Resource Man

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Question 1Linbarger Company’s main issue is cash mismanagement. There is improper maintenance, poor planning, and lack of coordination between receipts and payments. The people in-charge of accounts should come up with short-term sources of funding for company or device ways to generate money to run the errands. They need prior plans to honor the treaty or else it beats logic signing binding conditions which they do not adhere to at all.Question 2There is fraud, propagated by the financial vice president. Keeping the cash receipts book open for an extra day is fraud and unethical. Lisa should be the one discouraging such behaviors, and the financial controller should not be coerced to adhere to such instructions. It is unethical to close books late. The periodicity aspect of accounting calls for consistency in the closure of books of accounts. The receipts of 1st July or 2nd July should not be factored in the balancing for 30th June.Question 3Having a negative balance in the accounts will deter the closure of the books until the cash in the account is brought to $200,000. There are also going to be accrued charges for the delay which have to be paid before the closure is authorized. If the payment is not remitted within a reasonable timespan, for example within 30 days, the insurance company has the powers to instruct the bank to close the account. The reason for closure would be the inability to settle the outstanding arrears and leaving the balance too low. The insurance company is at liberty to report Linbarger Company to the financial institutions reporting agencies.The company can also be reported to the credit bureau due to the withstanding balances. These collection accounts negatively impact on a report and lower the credit score. The insurance company can also sue Linbarger Company for breaching the agreement (Yarahmadi, & Bohloli, 2015). Depending on the court’s ruling, the insurer can garnish the wages or lien the properties. The company will also experience delays in preparing the financial statements at the end of the accounting cycle. After this, the insurer can write off the remaining amount and term it as losses.Question 4Lisa, I, and other personnel responsible for accounting can be convicted of criminal acts. Complying will mean a delayed closure of books which is poor ethics. Such actions imply that one is ready to break other rules for individual benefits. We would be liable for punishment which can lead to imprisonment and loss of jobs. Such an ordeal will negatively affect our family members and the reputation of the company. The company’s reputation to the stakeholders will be lowered. Lack of trust makes it hard for the company to conduct business with other partners. The financial statements of Linbarger Company will be less useful. The financial decision-makers will be presented with manipulated information. Therefore, making reasonable decisions for the company will be deterred. Errors will be transmitted to the rest of the figures and thus hard to project the company’s status. AICPA Code of Professional Conduct calls for the automatic expulsion of accountants who commit fraudulent returns (Jenkins, Popova, & Sheldon, 2016).Question 5I will stick to the facts. Although in a dilemma, I will choose to close the books as required and ignore the unethical behavior. I will uphold honesty and integrity in my execution of duties (Klein, 2015). Although things might stay unveiled for a considerable period, the truth will be faced one day. I will not maneuver records to paint a misleading picture of the firm’s success. The result would be short-lived, and soon the fake financial reports will spell the collapse of the company if the Securities and Exchange Commission learns about the fraud.ReferencesJenkins, J. G., Popova, V., & Sheldon, M. D. (2016). In Support of Public or Private Interests? An Examination of Sanctions Imposed Under the AICPA Code of Professional Conduct. Journal of Business Ethics, 1-27.Klein, G. (2015). Ethics in accounting: A decision-making approach. John Wiley & Sons.Yarahmadi, H., & Bohloli, A. (2015). Ethics in Accounting. International Journal of Accounting and Financial Reporting, 5(1), 356-360.

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