Legality and Ethicality of Financial Reporting - 1239 Words

Legality and Ethicality of Financial Reporting ETH/376 August 25, 2014 Legality and Ethicality of Financial Reporting Excello Telecommunications has a history of excellent performance but with a surge in oversea competitors the company may not be able to meet its financial estimates for the first time. Executives were worried that not being able to meet the financial estimates could impact stock options, bonuses, and the share price of company stock. While looking to find a way to meet the financial estimates Terry Reed, the CFO, discovers a transaction on December 20, 2010 that might solve the problem. Excello sold $1.2 million of equipment to Data Equipment Systems. This type of transaction would be recorded as a sale on the†¦show more content†¦All CPAs who are members of AICPA are purely governed by the AICPA code of conduct. The code takes into consideration the needs of all financial statement users. Consideration of public interest is the main aim of the code. The Excello accounting department has the duty of following the professional d uties, be honest in the financial prospering and protecting the public interest. This means upholding their ethical status and protecting the interest of the public. In response to Reeds request the accounting department came up with three main scenarios they felt met his points of recording the $1.2 million transaction in 2010 and the decision must be defensible from a GAAP view point. They are as follows: 1. Transfers the products to an off-site warehouse owned by Excello by December 31 and hold it until January 11 when it would be shipped to Data Equipment. 2. Transfer the product to Data Equipment by December 31 and agree that the customer could return it for a full refund after it arrives at Data Equipment’s warehouse. 3. Offer Data Equipment a 10 percent discount to take the product by December 31. The first one, transferring the product to an off-site warehouse until January 11, is unethical. Despite the fact that the goods are located at an off-site storage facility, the product is still in the hands of Excello. They still hold the legal rights and therefore the sale has not happened. The second one, transfer the product toShow MoreRelatedLegality and Ethicality of Financial Reporting1296 Words   |  6 PagesLegality and Ethicality of Financial Reporting Petra Clark ETH / 376 June 3, 2013 Ding Hardin Abstract Excello Telecommunications is a successful organization, but because of a growing rivalry, the organization has begun to notice their earnings estimations might not be achieved. Excello’s top administrators are worried how this will impact the organization. We will look at possible options as well as their moral ramifications as well as the federal laws which can be applied to the situationRead MoreLegality and Ethicality of Financial Reporting1241 Words   |  5 PagesLegality and Ethicality of Financial Reporting Janet Tran ETH/376 Kathrine Parks University of Phoenix/Axia July 21, 2014 Excello Telecommunications was presented with a dilemma on how the company should report earnings so that they would appear to have met earning estimates for the 2010 financial year. The CFO, Terry Reed, was concerned with how failure to meet earning estimates would affect bonuses, stock options, and the share price ofRead MoreEthics Case 3-3: United Thermostatic Controls Case932 Words   |  4 PagesLegality and Ethicality of Corporate Governance ETH 376 Ethics Case 3-3: United Thermostatic Controls Case The purpose of this paper is to evaluate the legality and ethicality of the corporate governance activities that occurred in an ethics case presented in the text. The paper will provide relevant details regarding the legality of the activities, the criteria by which Sarbanes-Oxley would apply to this case, the ethicality of the activities, whether or not the activities were equitableRead MoreLegality and Ethicality of Corporate Governance985 Words   |  4 PagesLegality and Ethicality of Financial Reporting Clairice Sikoski ETH-376 December 10, 2012 Samuel Hinton Legality and Ethicality of Financial Reporting Excello Telecommunications is looking to record revenue before the earning process has been completed or before the unconditional exchange has occurred. Terry Reed, the CFO is trying to influence the accounting department to look for options to record the sale of 1.2 million in equipment by December 31 to boost earnings on financial statementsRead MoreLegality and Ethicality1100 Words   |  5 PagesLegality and Ethicality in Financial Reporting In week3, we are looking into the case of Excello Telecommunications, and study their behavior base on the knowledge of legality and ethicality in financial reporting. Excello Telecommunications has been successful in the past. However, in recent years, the company is facing more and more competitors. For the first in the company’s history, the earnings estimate won’t be met. This means nervous investors and drop in value of Excello stocks. And theRead MoreExcello Telecommuncations1587 Words   |  7 Pages 2014 Excello Telecommunications Case The year is quickly ending for Excello Telecommunications, and they are trying to maximize earnings for the company. With increased competition from foreign companies, Excello meeting its financial estimates are looking bleak. Failure to meet earnings expectations can reduce the availability of bonuses, stock options and could lessen the value of the company. Because of the threat in not meeting estimated earnings, the company’s CFO TerryRead MoreExcello1402 Words   |  6 PagesThe firm must adhere to all the laws and other regulations as set. Among the regulations include Generally Accepted Accounting Principles (GAAP), Sarbanes-Oxley Act of 2002 (SOX), and AICPA code of conduct. The rules impact the mechanism, of financial reporting in the company and also help sin the actions of major principles of accounting. As a result of this, the accounting team must ensure they get the best method that will help in maximizing g the wealth of the shareholders. Albeit the earnings Read MoreLegality Ethicality of Financial Accounting917 Words   |  4 PagesLegality and Ethicality of Financial Reporting Accounting professionals consider standard practices of accounting and board of accountancy rules when creating ethical standards. Accountants also consider state and federal laws. Ethics and the law works hand-in-hand therefore should be on the minds of those considering the commission of fraud. The Chief Financial Officer (CFO) of Excello, Terry Reed, was considering doing such by posting a $2.1 million transaction to raise year-end earnings. Read MoreEthics in Earnings Management Essays1320 Words   |  6 Pagespresented in response to the case â€Å"The Dangerous Morality of Managing Earnings,† as cited in Gibson (2011). The case dealt with the ethicality of managing earnings through management’s manipulation of factors that can have an effect on company resources and financial statements. It detailed a survey of more than 600 respondents which included general managers, financial managers, and others. An analysis of the survey results suggests the question of whether the management of earnings is ethical inRead MoreUnited Thermostatic Controls Eth 376 Essay951 Words   |  4 Pages ETH 376 June 25, 2012 Susan Paris United Thermostatic Controls This paper will show the legality of the activities that happened within United Thermostatic Controls based on federal, state, and local laws. As this case is examined the Sarbanes-Oxley act will be discussed as it played a role in this case because United is a publicly owned company. Also this paper will show the ethicality, if the activities were equitable to internal and external stakeholders, and what is the next step