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[Solved] What, if any, ethical issue is involved in this case?

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[Solved] What, if any, ethical issue is involved in this case?

Discussion Questions: Ethics vs. Morals


Ethics vs Morals 1. When the FASB issues new standards, the implementation date is frequently 12 months from date of issuance, and early implementation is encouraged. Becky Hoger, controller, discusses with her financial vice president the need for early implementation of a standard that would result in a fairer presentation of the company`s financial condition and earnings. When the financial vice president determines that early implementation of the standard will adversely affect the reported net income for the year, he discourages Hoger from implementing the standard until it is required. Required: a. What, if any, ethical issue is involved in this case? b. Is the financial vice president acting improperly or immorally? c. What does Hoger have to gain by advocacy of early implementation? d. Who might be affected by the decision against early implementation? (CMA adapted) GAAP 2. At the completion of the Darby Department Store audit, the president asks about the meaning of the phrase "in conformity with generally accepted accounting principles," which appears in your audit report on the management`s financial statements. He observes that the meaning of the phrase must include more than what he thinks of as "principles." 1. Briefly explain your understanding of the meaning of the term "accounting principles" as used in the audit report. Do not include in your discussion the significance of "generally accepted". 2. The president in this case wants to know how you determine whether or not an accounting principle is "generally accepted". Discuss the sources of evidence for determining whether an accounting principle has substantial authoritative support. Norwalk Agreement/Convergence Project 3. The Norwalk Agreement/Convergence Project. It was hoped that the U.S. would have adopted IFRS standard between 2012 and 2014 It does not appear that is going to happen, at least for now. The Convergence Project is one project away from being shutdown, temporarily or permanently. The reason for this is the Condorsement and the plans the U.S. has for the continuance of its accounting system, at least for now. Required: What is the Condorsement and why do you think it was created? Is it a good or bad move for the US? Why or why not? What message does it send to IFRS? Accounting Standards: Politicalization 4. Some accountants have said that politicalization in the development and acceptance of generally accepted accounting principles (i.e., standard setting) is taking place. Some use the term politicalization in a narrow sense to mean the influence by governmental agencies, particularly the SEC, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromising that takes place in bodies responsible for developing these principles because of the influence and pressure of interested groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, etc.). Required: 1. The Committee on Accounting Procedure of the AICPA was established in the mid- to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed, and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicalization (as the term is used in the broad sense) of accounting standard setting? Explain your answer by indicating how the CAP, APB, and FASB operated or operate. Cite specific developments that tend to support your answer. 2. What arguments can be raised to support the politicalization of accounting standard setting? 3. What arguments can be raised against the politicalization of accounting standard setting? (CMA adapted)

AccountingNameCourseInstructorDate Ethics vs. Morals Issuance of new standards results to pronouncements and the ethical issue is making of questionable entries that do not reflect the true financial conditions on expected earnings resulting to a conflict on how to use IFRS. Becky Hoger should present the true evaluation of earnings, but the need to provide information that maximizes short term results while disregarding standards is the main source of conflict.There is no legal obligation for the early implementation of standards, but financial reports will not show fair presentation. To users of financial reports, there is need for fair and accurate information as they make decisions based on information presented, and hence the VP is acting inappropriately. It is probable that the VP’s bonus is tied to the earnings, and a drop in earnings would result to a lower pay. Even though, there is pressure to use the earnings figure that reflects positively on the organization, it is still improper but not immoral to ignore rules.Hoger simply exercises responsibility entrusted to her by the public and has nothing to gain personally. Through advocating for early implementation the organization is better able to present financial information in accordance to the new standard, and Hoger is able to fulfill the task of presenting financial information th...

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