Ethics Case BYP4-7 As the controller of Take No Prisoners Perfume Company, you d
ID: 2576828 • Letter: E
Question
Ethics Case BYP4-7 As the controller of Take No Prisoners Perfume Company, you discover a misstatement that overstated net income in the prior years financial statements. The misleading financial statements appear in the company's annual report which was issued to banks and other creditors less thana month ago. After much thought about the consequences of telling the president, Mike Flanary, about this misstatement, you gather your courage to inform him. Mike says, "Hey! What they don't know won't hurt them. But, just so we set the record straight, we'll adjust this years financial statements for last year's misstatement. We can absorb that misstatement better in this year than in last year anyway Just don't make such a mistake again. Instructions (a) Who are the stakeholders in this situation? (b) What are the ethical issues in this situation? c) What would you do as a controller in this situation?Explanation / Answer
(a). Answer - In the given situation, the stakeholders of Take No Prisoners Perfume Company are the Banks and the other creditors who are interested in knowing the financial position of the company and want to see the financial statements of the company, auditors annual report etc....
(b). Answer - The ethical issues which the company is facing is the discovery of the mistatement in overstating the Net income in the priot period period financial statements.
(c). Answer - As a controller, the mistatement which is being identified in the last year financial which has resulted in the overstated in the amount of net income. Therefore the amount which is overstated should be adjusted with the current year financial statements and a proper disclosure should be given in the notes to accounts which should be easily understandable to the stakeholders of the company.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.