CFO response to a mistake in issued financial statements
Not what you're looking for?
As the CFO of SAL Inc., you discover a misstatement that overstated net income in the prior year's financial statements. The misleading financial statements appear in the company's annual report that was issued to banks and other creditors less than a month ago. After much thought about the consequences of telling the president about this misstatement, you gather your courage to inform him. The president suggests that you simply adjust this year's financial statements since what the banks and creditors don't know won't hurt them.
Answer the following questions:
? Who are the stakeholders in this situation?
? What are the ethical issues involved in this situation?
? What would you as a CFO do in this situation?
Purchase this Solution
Solution Summary
The solution examines the responsibilities of the persons involved in the presentation of the financial statements. The subsequent actions are discussed in terms of a CPA being involved or not, although the ultimate solution is the same. Further discussed are possible consequences of two different responses for a solution.
Solution Preview
We aren't told whether the CFO is a CPA or not, and we don't know whether a CPA firm was involved in the financial statements. If either a CPA or a CPA firm is involved, there is no question about the procedure. The company must reissue their financial statements and attempt to recover the earlier version, plus inform stakeholders of the error.
It is not uncommon for errors to be made, for whatever reason, but not reissuing and informing interested parties compounds the error. ...
Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Operations Management
This quiz tests a student's knowledge about Operations Management