United Thermostatic Controls Eth 376 Essay

951 WordsJul 4, 20124 Pages
United Thermostatic Controls ETH 376 June 25, 2012 Susan Paris United Thermostatic Controls This paper will show the legality of the activities that happened within United Thermostatic Controls based on federal, state, and local laws. As this case is examined the Sarbanes-Oxley act will be discussed as it played a role in this case because United is a publicly owned company. Also this paper will show the ethicality, if the activities were equitable to internal and external stakeholders, and what is the next step based on everything that has happened. Ethics is something that should always be at the forefront of every decision a company makes because if an unethical act is committed it will come out at some point, and…show more content…
The main criteria that needs to meet in regard to the SAB 101 is that delivery has occurred or services have been rendered this criteria must be met before revenue is recognized (Phillps, Luehlfing, & Daily, 2001). In this circumstance delivery or partial delivery has occurred but there is a possibility of the shipments being returned because of the shipping instructions of the customers. There are times when exceptions to these rules do exist, and when that type of circumstance arises there must be clear communication between the external auditors and the finance departments. Next are the Sarbanes-Oxley Act of 2002 and the criteria that would apply to the case of United Thermostatic Controls. Section 401 of the Sarbanes-Oxley Act pertains to this case because this section discusses that financial reports are to be accurate and presented in a manner that does not contain incorrect statements or admit to state material information (Soxlaw, 2006). If United was to make the choice to commit fraud by reporting revenue during the fourth quarter just to raise revenue based on purchase orders not due to be shipped until early 2011 this would go against SOX. The SOX was created to prevent and punish

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