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Ethic Case Analysis

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Required:

1. Follow the seven steps ethical decision making process and reason out what the accounting firm should do in this situation.

2. Assume that the auditing company decided to switch back to the modified operating method subsequent to the issuance of January 1, 1995, quarterly financial statements because of the accounting firm's threat to resign and report the difference of opinion to the SEC, How should this decision affect the quarterly statements for the remainder of the fiscal 1995 and October 31, 1995, year end statement?

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Required:

1. Follow the seven steps ethical decision making process and reason out what the accounting firm should do in this situation.
The accounting firm should follow the seven steps ethical decision making process as follows. The first step is to determine the facts. There are some reasons given by the CFO. These include arguments that the principal portion of the transaction involves the client's right to the product, and payments are fixed under a non cancelable agreement. If the accounting firm finds that the arguments made by the CFO are not supported by facts it must move to the next step. The second step is to ascertain the impact on people. The accounting firm is taking a strong decision of resigning from its position. The accounting firm should evaluate how its decision will impact the external and internal stakeholders. The accounting firm has the option of consulting with some of the stakeholders like board-members, shareholders and ordinary employees. The third step in ethical decision making is the consult your values. The values demand an action in every situation in which they apply. If the new method of accounting does not agree with the values of the accounting firm the accounting firm should stick with its decision of resigning from its position. The fourth step in ethical decision making is to realize that there is more than one right answer. The accounting firm should reexamine the modified accounting method and the new method and determine if the new method is not a right method. Also the ...

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