Homework: Ethical Decisions in Accounting
Scenario
Paige Carter is the controller for a public organization in Nashville, TN. She has just completed a meeting with the organization's CFO, Tommy Rich. Tommy Rich tried to convince Paige to classify some inventory items as fixed assets in an attempt to depreciate more assets for the upcoming accounting reporting period. Tommy Rich's proposal would depreciate more assets by misclassifying inventory as fixed assets in an attempt to reduce net income. Paige knows it is her responsibility to ensure that all items on the organization financial statements are recorded properly as required by the FASB and the AICPA Professional Code of Conduct. She has a great deal of pressure to reduce net income to reduce corporate income taxes and qualify for a company bonus. She does not want to disappoint the CFO, and her job may be at stake.
i. What would you do in this case? Why?
ii. What is Paige's obligation to the organization, AICPA professional rules of conduct and reporting requirements?
iii. Discuss the differences between inventory and fixed assets. Are the characteristics the same? Why or why not?
iv. What would motivate you to speak up? What would cause you to stay silent? Would it make a difference if this was only a one-time request from the CFO?
Instructions
Prepare an 8 to 9 slides PowerPoint presentation in which you:
I. Slide I: Include the title "Paige Carter and the CFO," the date, course name and number, date of submission, and your professor's name.
II. Slide II: Summarize the scenario for the CFO.
III. Slide III: Outline the advantages of accurate reporting and why inventory should or should not be classified as a fixed asset.
IV. Slide IV: Outline the disadvantages of accurate reporting and why inventory should or should not be classified as a fixed asset.
V. Slide V: List the major differences between inventory and fixed assets.
VI. Slide VI: Show the primary ways in which both classifications would affect the future of the business (why should we classify inventory and fixed assets in the same account or separate accounts?).
VII. Slide VII: Recommend which option they should pursue. Justify your reporting decision.
VIII. Slide VIII: Sources.
Format your homework according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.