Acct3563 Individual Report

1177 WordsAug 18, 20135 Pages
1. Define the problem As an accountant, I am aware that the company has been smoothing its profits during the previous years. I also suspect that the company will draw down funds from the reserve account to smooth out the damages that the contamination issue have on its profit for the year. Who are the stakeholders The stakeholders of the company include: Internal stakeholders * Me * Mr. Robson * Company Board of Directors * Employees of the company External stakeholders * Shareholders/Investors * Creditors/Debt-holders 2. Ethical principles (Utilitarianism) Ethics are concerned with the fundamental concepts and principles of decent human conduct; which is having a sense of what is right and wrong. Utilitarianism…show more content…
Do nothing If I decide to do nothing, this year’s profit will be overstated and income smoothing practices will be left unaware. Directors, managers and employees involved in this situation would be left uncaught with opportunistic managers or directors gaining their bonuses if their remuneration is related to performance pay. Market confidence would be left unaffected although the financial statements may not reveal a true picture of the company’s financial strength for users. Reporting to the Board of Directors If board of directors decides to rectify previous frauds, they would investigate into the event, take appropriate legal action against people involved and disclose previous frauds with the previous and current year financial statements. If they decide to cover-up their fraudulent practices; they may warn me to stay out of this business or threaten to dismiss me. Both decisions would have differing effects on external stakeholders. 5. Deciding on action I would decide to take no action, however I will resign to prevent any troubles that may occur as an insider of the company’s fraudulent practices if they are caught in the future. 6. Evaluate results According to utilitarianism, actions must be taken to serve the greatest good to the greatest number of people. By doing nothing;

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