Business Ethics: Booking the Budget Teaching Notes
ACCOUNTING MINICASE: ACCT – 08
TEACHING NOTES
BUSINESS ETHICS PROGRAM
Booking the Budget
Teaching Notes
What Are the Relevant Facts?
1.
Maria and Andy have organized and are responsible for the accounting system of the HMO.
2.
Bob and Connie, executive officers of the HMO, are mainly concerned with rosy sales results.
3.
Financial sales accruals have been recorded for numbers that are closer to budget projections than actual sales.
4.
Auditors reviewing the financial figures will require adjustments to the inflated sales accruals.
5.
Maria and Andy can begin to look for new jobs.
6.
Maria and Andy can do nothing.
What Are the Ethics of the Alternatives?
1.
Do readers of the newsletter have a right to expect unbiased financial reporting?
2.
Do Maria and Andy have any obligations that require them to prepare accurate interim financial reports? 3.
Does the board have a right to receive accurate financial reports?
4.
Do Maria and Andy have a right to be able to approach their superiors about an issue like this without fear of reprisal?
5.
Is there an inequitable burden imposed on readers of the financial data?
6.
Is there an unfair benefit received by those who endorse the current financial reporting practices?
7.
Is there a cost to the accounting profession from financial reporting of this nature?
What Are the Ethical Issues?
1.
To what extent are Maria and Andy responsible to take action to curtail the recording of budgeted sales? 2.
To what extent are the auditors responsible for supporting better interim accruals of sales?
3.
To what extent is there an obligation by the company to ensure that only correct data about financial results is recorded and disseminated?
Who Are the Primary Stakeholders?
•
•
•
•
•
Maria
Andy
Readers of the monthly newsletters
Possibly Connie, depending on his knowledge and stand on the reporting practices
The board of directors
What Are the Practical Constraints?
1.
Everybody knows that interim
TEACHING NOTES
BUSINESS ETHICS PROGRAM
Booking the Budget
Teaching Notes
What Are the Relevant Facts?
1.
Maria and Andy have organized and are responsible for the accounting system of the HMO.
2.
Bob and Connie, executive officers of the HMO, are mainly concerned with rosy sales results.
3.
Financial sales accruals have been recorded for numbers that are closer to budget projections than actual sales.
4.
Auditors reviewing the financial figures will require adjustments to the inflated sales accruals.
5.
Maria and Andy can begin to look for new jobs.
6.
Maria and Andy can do nothing.
What Are the Ethics of the Alternatives?
1.
Do readers of the newsletter have a right to expect unbiased financial reporting?
2.
Do Maria and Andy have any obligations that require them to prepare accurate interim financial reports? 3.
Does the board have a right to receive accurate financial reports?
4.
Do Maria and Andy have a right to be able to approach their superiors about an issue like this without fear of reprisal?
5.
Is there an inequitable burden imposed on readers of the financial data?
6.
Is there an unfair benefit received by those who endorse the current financial reporting practices?
7.
Is there a cost to the accounting profession from financial reporting of this nature?
What Are the Ethical Issues?
1.
To what extent are Maria and Andy responsible to take action to curtail the recording of budgeted sales? 2.
To what extent are the auditors responsible for supporting better interim accruals of sales?
3.
To what extent is there an obligation by the company to ensure that only correct data about financial results is recorded and disseminated?
Who Are the Primary Stakeholders?
•
•
•
•
•
Maria
Andy
Readers of the monthly newsletters
Possibly Connie, depending on his knowledge and stand on the reporting practices
The board of directors
What Are the Practical Constraints?
1.
Everybody knows that interim