Revenue Recognition for Penn Square Bank
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What were the ethical pressures on the Penn Square Bank concerning documentation, credit extension, and revenue recognition that lead to the final collapse? What should have been done to reduce or offset these pressures?
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The ethical pressure on Penn Square Bank concerning documentation was that they did not keep the documentation required to operate the bank. The pressure was that the cost of keeping documents would be prohibitive. The bank was not able to manage its credit risk because it did not have a sound financial recordkeeping system. From the deontological ethical perspective, it is the duty of Penn Square Bank to maintain adequate documentation. The action of not keeping adequate documents is an action of low moral worth.
The policy of credit extension of Penn Square Bank to insiders as well ...
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- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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