Problem: You are an accountant in a large firm. Your boss tells you to use a controversial accounting practice which will make the company's profits seem higher. She tells you it is only to impress stock holders and will not be used in statements submitted to the IRS.
Discuss each situation:
(a) from the strictly legal viewpoint
(b) from a moral and ethical viewpoint, and
(c) from the point of view of what is best in the long run for the company
Be sure to consider both short and long range consequences. Also look at each situation from the perspective of all stakeholders (groups concerned: customers, stockholders, employees, government, and community).
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Unethical accounting practices not only cause instability in the market, but they also cause the investor's safety within their investments go down. Investors and stakeholders have a right to have their investments and interests kept secure. From a legal standpoint, the use of controversial accounting practices becomes a breach of contract between the office holders and the stakeholders. The office holders have a vested obligation to ensure that they perform their duties within the highest possible standards and not only protect the shareholders' interests, but also maximize their value where possible. The altering of the financial books constitutes fraudulent financial reporting, which is an intentional misstatement or omission of amounts or a disclosure within the financial statements to deceive financial statement ...
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