Every profession under the sky has a set of conduct and principles that regulates its normal functioning. These principles are in place mainly to provide uniformity of the practice and set the required standards associated with the profession for quality control purposes. In accounting these standards are stipulated by Financial Accounting Standards Board (FASB). It is a non-profit, private based organization that was established to set and improve accounting principles.
When a new accounting standard is issued by the FASB, the implementation date is usually 12 months from the date of issuance. However, since the implementation is inevitable, early implementation is encouraged for familiarization purposes with the new standard. In this case study, Becky Hoger who is a controller advocates for early implementation of a new standard in an organization but she is turned down by the Vice President as it will affect the net income.
The ethical issues affiliated with this case are:
- Pressure from management.
- Accountant as whistleblower.
- Effects of greed.
- Pressure From Management
In order to uphold personal interests, the accountants face an ethical issue of pressure from above which they gradually give in to for fear of management and losing their jobs. It is unethical for those in power to use their position to intimidate their juniors and coerce them into acting in an unprofessional manner like the VC is doing to Becky in this case.
Accountant as Whistleblower
There is an ethical dilemma faced by Becky as the controller. She has a hard time choosing between reporting the accounting violation by the VC (which is the right thing to do) and staying silent like the VC asks of her.
Effects of Greed
Greed is an ethical concern in any organization. It leads to unethical practices just so more money can be made. The VC shows his greed by asking Becky, the financial controller, not to implement the new standards although he knows it is the right thing to do.
In regards to the General Accepted Accounting Principles, the VCs code of conduct is questionable. He acts unprofessionally and unethically. This is because he is required to remain impartial and loyal to accounting guidelines but he does not. In fact, he goes ahead into misusing his power and position into coercing Becky to act in line with his own personal interests.
Failure to implement the new account standards will not give a true and fair picture of the company. The VC is well aware of this yet sticks to his plan.
As a financial controller, Beckys role is clear in the organization. Moreover, she acts in a professional manner by pushing for the implementation of the new standard. She gains the qualities of a good accounts practitioner. In so doing, she achieves faithful representation of the company. This is because the numbers and words in her financial statements can be used to accurately predict the economic future of the company without giving the impression of false successes.
In case the new standard is adopted, the VC will be the first person to be affected by the same. This is because his position, duties and ethics are all questionable under the CMA. CMA signifies that the holder of such is ethically competent and in this case the VC is not.
Also, all other staff members acting in support of the VC will be affected since their personal interests will be interfered with.
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