Discussion Topic 1: Ethics

Read Ethics Case CT13.8 and address the following questions:

1. Who are the stakeholders in this situation?
2. Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?
3. Are the board members or anyone else likely to discover the misclassification?

Just do response each posted # 1 to 3 down below only

Posted 1

• In this scenario like most of the others we’ve had the stakeholders are those directly involved with the company. This scenario like the last one are those invested with the company and the employees.

• With this scenario it was very unethical for the president to convince the controller to cook the numbers. Doing so was unethical by both parties as this is not the correct action to take. Granted stakeholders don’t want to see a loss at any point, it is acceptable to see a company not do well one year and bounce back another. The controller should have said that there was a way instead of telling his boss that it was taken care of, and that even though there was a way advise against it.

• Yes. This adjustment is something an auditor could discover easily but for stakeholders there is the chance they overlook it or don’t realize what they are looking at especially if it was readjusted to show the numbers being positive for the company. People do quick glances at everything.

Posted 2

Good morning classmates,

1. The stakeholders are everyone that the business affects. This includes the ten stockholders who are used to receiving their yearly dividend, and all of the employees. It also includes the companies that produce the parts that Wesley Corp. sell through wholesaling, as well as the customers who rely on Wesley Corp. to ship parts on a timely fashion so their business can operate.

1. As we have seen during multiple scenarios involving unethical behavior, when cash bonuses or dividends are linked to financial performance, the risk of unethical behavior increases. Samuel Gunkle is concerned about one thing, retaining his position as president and CEO. He is fully aware that if the stockholders do not receive their dividends, he may be out of a job and he will do what is necessary to retain that job. The scenario fully proves that this is the only thing he worries about, as when the controller came back with adjusted financial statements, the president was not concerned why they were changed, only that they were changed so that their net cash flows exceeded $ 1 million dollars (Weygandt, Kimmel, & Kieso, 2018). The president is operating in the best interest of himself, not the business and the stakeholders as he should.
2. If a proper analysis of the financial data is performed the misclassification may be discovered. The board members may not look into the statements thoroughly enough to find the misclassification, however the auditing accountants that will perform their yearly audit should. When the auditing team locates the miscalculation, they will report it to the president. If they feel that he will not handle the matter appropriately, the auditing team is then charged to take the matter to the next level of management, which will be the board members. When this is then brought to their attention, they should realize that the president had a hand it this issue and act accordingly.

Posted 3

Hello Instructor and Class

Who are the stakeholders in this situation?

The stakeholder will be the equity stockholders, board of directors, and employees.

Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?

Yes, Samuel, the president, request for the controller to do modifications on the accounts for the income to be higher than initially stated. That would be why it was unethical because his actions are no longer acceptable.

Are the board members or anyone else likely to discover the misclassification?

The auditors, internal, and external could discover the misclassification —

also board members or anyone that finds the misclassification.