Acct3102 Case Study Example

7723 words 31 pages
EXAMPLE: HIGH DISTINCTION PAPER

ETHICAL ISSUES
QUESTION 1
Richards adopts a teleological-parochialism position 1 to justify that his actions are ethical, 2 even though they are illegal (Baugher & Weisbord, 2009). 3 Richards argues that his actions are ethical as they resulted in desirable consequences, in the form of better sales/performance figures, which met analyst forecasts and positively affected shareholder value (Radtke, 2004; Fernando, Dharmage, & Almeida, 2008). 4 He acted in the interests of his ‘in-group’ (other executives/managers), maximising their performance-based compensation, 5 at the expense of others (Barnett, Bass, & Brown, 1994). 6 Richards also claims that his actions were not serious, as recognising revenues
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Firms use this flexibility to manage future earnings. 15 For example, if CA had achieved the same results by reducing depreciation expense (by changing from accelerated depreciation to straight-line depreciation), this may be legal, but could be considered unethical, if it was aimed at manipulating earnings to defraud investors about the actual financial performance of the company. It would be unethical under the ethical universalism position, because he pursued the interests of a particular group of individuals at the expense of investors. ACCT3102 External Reporting Issues Case Study – Letter from Prison Page 2 of 19

EXAMPLE: HIGH DISTINCTION PAPER

QUESTION 2
The Board of Directors are ultimately responsible for the preparation, presentation and content of financial reports. 16 They must keep proper records, monitor financial affairs, review and approve financial statements. The Board is also responsible for corporate governance (‘CG’). CG can be defined narrowly17 or widely. 18 CG is the processes that direct firms in a framework of legal, institutional, cultural and social factors, where the interests of various stakeholders must be balanced. It involves the leadership, 19 management 20 and control of an entity by formal/informal and public/private rules (Wieland, 2005). CG deals with agency issues relating to the

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