Ethics and financial reporting

 

You have been recently hired as an assistant controller for XYZ Industries, a large, publically held manufacturing company. Your immediate supervisor is the controller who also reports directly to the VP of Finance. The controller has assigned you the task of preparing the year-end adjusting entries. In the receivables area, you have prepared an aging accounts receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate estimated balance for the allowance for uncollectible accounts is $180,000. The existing balance in the allowance account prior to any adjusting entry is a $20,000 credit balance.

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.”

 

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?

 

Sample Solution

(3): 539-549.

This article asserts that physical appearance, especially being attractive, is a valuable and prominent asset in many situations of human interaction. Individuals judgements of others’ appearances are linked to body sizes which are depended on and influenced by a complex set of social and cultural values and norms. Thin bodies are appraised as they are in line with beauty norms while overweight bodies are stigmatized. The authors analyze the relationship between body weight, race and notions of attractiveness. They hypothesize that on various dimensions of attractiveness, white girls and black girls will be ranked differently based on body weights. Data for this study was drawn from the National Longitudinal Study of Adolescent Health with a sample consisting of 5947 white and black girls aged 12 to 18. Results show that white girls were more likely to be ranked physically attractive and described as having an attractive personality than black girls. The article concludes that overweight and obese girls are less likely to be perceived as attractive, well-groomed and having a likeable personality compared to thin girls. The stigmatization of overweight and obese girls was more prevalent among black girls; however, overweight white girls face more stigma than overweight black girls and this is due to the notion that all white girls are supposed and expected to be thin and beautiful.

Ali et al.’s article demonstrates that physical appearance determines how an individual is perceived by others and whether this individual meets the standards of beauty. White girls are automatically perceived as more beautiful, and this even goes as far as assuming they have a more likable personality. Overweight black girls face stigmatization, however this stigma is worse for white girls because of racial beauty expectations. Therefore, this article provides support for the research question in assessing how conceptions of race and beauty are formed and related.

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