Mary Brown is the assistant chief accountant at Tacos Grill, Inc. a nationwide M

Question

Mary Brown is the assistant chief accountant at Tacos Grill, Inc. a nationwide Mexican restaurant chain. Their fiscal year just ended so Mary is preparing financial statements and gathering the data needed for their audit so that the annual financial statements can be prepared and released to management and the regulatory agencies. The CFO, Bill Greene, reminds Mary that their building which originally cost $350,000, now has a value of $600,000. He also told her to make sure to include the value of their satisfied customers as assets so that their assets increase in comparison to the prior year. In order to fulfill their plans of expansion, the company needs more cash soB wants to ensure their financial statements look appealing to new investors and stockholders. Mary knows that Bill's reminders are not in accordance with GAAP but she fears that if she doesn't abide by his she that job. will lose her REQUIRED: . What are the ethical issues and possible GAAP violations? (at least 2) 2. Who are the stakeholders? (at least 3) s. What are Mary's alternatives? (at least 3) What would you do? Explain

Explanation / Answer

1. Following are the possible GAAP violations:
a. Valuation of the building at current value is not as per the IAS 16.
b. Recognition of customer value is not as per the IAS 38

2. Following are the stakeholders:
a. Investors
b. Financial Institutions
c. Employees

3. Following are the 3 alternatives of Mary:
a. Do as per the suggestions of the CFO.
b. Leave the job
c. Inform the shareholders about the same.

4. Had I been in the place of Mary, I would have had a discussion with the CFO and try to convince him to not to do such a thing and if he still not agrees, I would have resigned.

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