Essay Available:
Pages:
2 pages/≈550 words
Sources:
2
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 9.36
Topic:
Litigation, Censures and fines
Essay Instructions:
You are the accountant for ACC KarParts, a thriving company that makes auto parts. You oversee all accounting functions within the company. Quinn, your supervisor, has informed you that if the company's profits grow by 30% this year, you will receive a $30,000 bonus, and she will receive a $60,000 bonus. No bonuses will be awarded if profit growth is less than 30%. Near the end of this fiscal year, the two of you have the following conversation:
Quinn: We are getting close to 28% profit by the end of this year. If this happens, neither you nor I will get any bonus. What can be done to reach our target and get our bonus?
You: There is nothing we can do to reach 30% profit this year. However, we can plan to reach that target next year.
Quinn: If we claim some of next year's revenue as part of the current year, you will get your bonus, I will get mine, and the investors will be happier. Therefore, everybody will be happy.
You: Uh, Quinn, that would be an unethical action.
Quinn: We are simply moving revenue from one period to another. We are not faking the revenue transactions.
As an accountant, what would you do in this situation?
Instructions
Write a 2–3 page report explaining to Quinn why you can't move revenue from one period to another. In the report:
Explain the importance of ethics in accounting.
Apply ethical principles and professionalism to the case at ACC KarParts.
Based on generally accepted accounting principles, recommend at least three acceptable legal alternatives to meet company goals.
Essay Sample Content Preview:
Litigation, Censures, and Fines
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Litigation, Censures, and Fines
This case discusses ACC KarParts Ltd, which is a successful auto parts manufacturing company that is currently confronting an important ethical issue at the moment. According to union records, the company's profits are within a whisker of the figures that would open the employees up to million-dollar bonuses. However, the strategy in this case of achieving this target is rather equivocal: to transfer revenues from the next fiscal year to the current one raises ethical questions. This paper will examine why practice of such a dreadful situation is unethical and goes against the norms of proper accounting. It will do this to determine plausible options that can be pursued to maintain the credibility of the accounting profession.
Importance of Ethics in Accounting
Ethical accounting aids in the accurate preparation of accounts and prevents fraudulent activities. Accounting ethics may be defined as the standards of conduct in any professional practice, specifically accounting, concerning moral and legal obligations. Internal control plays a vital role in ensuring that financial statements are credible to investors, creditors, and other users of such statements (Kiradoo, 2020). Ethical accounting promotes honesty through proper accounting to the intended users, enhancing investors' confidence in the business and leading to market stability. Furthermore, compliance with ethics minimizes legal repercussions or violations resulting from fakeness or providing untrue numbers. Consequently, ethics is a crucial component in the operation of the accounting profession, and professionals are expected to act with integrity, objectivity, and professionalism.
Ethical Principles and Professionalism in the ACC KarParts Case
One of the ethical issues in Quinn's proposal is the proposed approach to generate new revenues. It is a clear violation of the principle of integrity that mandates that an accounta...
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