In the business situation with Ahi Corporation, an employee of Ahi offers the suggestion of a using a “float” to earn interest on a payment due to Internal Revenue Service. In the past this practice of a free money was once encouraged by many, to help aid business, however in recent years is has been discouraged and it is not recommended.
In 2003, Congress passed Check 21 (Check Clearing for the 21st Century Act), allowing banks to use scanned checks. The float days have decrease as well as time is takes to process or mail payments. According to Humprey, (2014) “the key, however, was legislation allowing a digital image of a check to have the same legal standing as the original paper check” (p. 128). Once this legislation was in place, check …show more content…
When an organization decides to find loopholes and are looking for ways to capitalize on such loopholes, it can be the start of a slippery slope. Knowing, when you are purposely floating a check, the organization is allowing the assets to be recorded on both ends leading to double accounting and the overstatement of an organizations bottom line. Furthermore, any human error on the drawer’s end, could lead to insufficient funds, which could create an atmosphere for fraud, such as check kiting. McCurnin and Frandsen (2008) believe that even though Check 21 has created limitations for check float, it has not deterred check kiting (p. 295).
To oversee the ethics in the situation with the Ahi Corporation, the American Institute of Certified Public Accountants (AICPA), develop rule [1.100.001.02] which is titled, “Integrity and Objectivity.” The Code states clearly that, “A member would be considered in violation of the “Integrity and Objectivity Rule” [1.100.001] if the member cannot demonstrate that safeguards were applied that eliminated or reduced significant threats to an acceptable level.” Therefore, it cannot be recommended that Ahi Corporation follow this suggestion because they cannot eliminate and reduce possible significant
In 2003, Congress passed Check 21 (Check Clearing for the 21st Century Act), allowing banks to use scanned checks. The float days have decrease as well as time is takes to process or mail payments. According to Humprey, (2014) “the key, however, was legislation allowing a digital image of a check to have the same legal standing as the original paper check” (p. 128). Once this legislation was in place, check …show more content…
When an organization decides to find loopholes and are looking for ways to capitalize on such loopholes, it can be the start of a slippery slope. Knowing, when you are purposely floating a check, the organization is allowing the assets to be recorded on both ends leading to double accounting and the overstatement of an organizations bottom line. Furthermore, any human error on the drawer’s end, could lead to insufficient funds, which could create an atmosphere for fraud, such as check kiting. McCurnin and Frandsen (2008) believe that even though Check 21 has created limitations for check float, it has not deterred check kiting (p. 295).
To oversee the ethics in the situation with the Ahi Corporation, the American Institute of Certified Public Accountants (AICPA), develop rule [1.100.001.02] which is titled, “Integrity and Objectivity.” The Code states clearly that, “A member would be considered in violation of the “Integrity and Objectivity Rule” [1.100.001] if the member cannot demonstrate that safeguards were applied that eliminated or reduced significant threats to an acceptable level.” Therefore, it cannot be recommended that Ahi Corporation follow this suggestion because they cannot eliminate and reduce possible significant