Legality and Ethicality of Corporate Governance

985 Words4 Pages
Legality and Ethicality of Financial Reporting
Clairice Sikoski
December 10, 2012
Samuel Hinton

Legality and Ethicality of Financial Reporting

Excello Telecommunications is looking to record revenue before the earning process has been completed or before the unconditional exchange has occurred. Terry Reed, the CFO is trying to influence the accounting department to look for options to record the sale of 1.2 million in equipment by December 31 to boost earnings on financial statements. The purchasing company does not want the order of equipment delivered until the middle of January.
Identifying the legal issues involved and considering state and federal laws and how they apply to the case. Alternative one
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Integrity is low in this case. Integrity requires a member to be honest and straight within the limitations of client confidentiality. Service and public trust should not hold more value than personal gain. If the third option is selected as their method to do business It will help the company meet their obligation to perform professional services to the best of their ability with concern for the best interest of the company the equipment is provided. They also will meet responsibility to the public for acting ethically and doing business in an honest manner.
Determine the ethicality of the events within the case. This case walks the ethically slippery slope. Terry Reeds, the CFO panics about his personal gain if the company does not meet standard profitability. He forgets to put others first and tries to use his position to push other employees to tamper with sales information in the companies favor. The accounting department came up with three alternatives one of which meets ethical requirements. This area is still on the slippery side because the accounting department should only have produced ethical correct options.
The best alternative offered by the team is option three to offer Data Equipment a 10% discount to take the product by December 31. For the company to present its business in the financial position it would like in a legal manner aligned with accounting standards Data Equipment has to receive

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