Q15, Case 4-3: Ethical Dilemmas
Q10. The ethical issues that should be considered before deciding whether to hire the controller of a client is that they need to make sure that the controller is reliable because this may lead to possible threats to independence to the firm . Hiring them is going to make the firm not independent and this would increase risk to the company as well. If hiring the controller then they would know everything about the firm and this can expose them to information that they are not supposed to know. Overall, this would not be an efficient idea to allow the controller to do tax duties for the clients because then the information would not be held confidential for the firm. If I was the manager of the firm, then I would find a different way to do the tax work, and hire somebody else that is reliable and still can maintain confidentiality for the company.
Q15. There are dangers in doing …show more content…
The rules for revenue recognition in accounting based on the company is that the revenue should be received and also being realizable. The revenue earned and being realizable is displayed according to the Standard Board of Accountancy 101. This is meaning that until the consumer has received their goods, then the company can have revenue that is earned, if the customer does not receive the goods, then the company should wait until they do in order to recognize the revenue. It states that the revenue should be both earned and realizable and not just one or the other. The proposed handling of the $12 million violates the rules because based on the method of recognizing the revenue when it is earned and realizable which the company did not do. Their method of shipment and processing the transaction was not following the regulations. Since the CEO had asked one of his employees to cook the books which is definitely violating the accounting procedure. Because he knew that it was wrong, yet he still wanted her to change the numbers so the company can still remain