Question

Please help. Need pretty lengthy answers. if someone can explain it to me thatd be great!

Ethics in Action New Wave Images is a graphics design firm that prepares its financial statements using a calendar year. Manny Kinn, the company treasurer and vice president of finance, has prepared a classified balance sheet as of December 31. In January, this balance sheet will be submitted along with an application for a loan from First Peoples Community Bank. An excerpt from the balance sheet follows: The accounts receivable balance includes a $56,000 loan to Tom Morrow, the company president. Tom borrowed the money from New Wave 18 months earlier for a down payment on a new home. Tom has orally assured Manny that he will pay off the loan within the next year. Because Tom is the company president, Manny treats the amount due as a trade account receivable. In addition, Manny knows that the bank will consider a large balance in trade accounts receivable more favorably than a large personal loan to a single individual. Manny reported the $56,00 manner on the preceding year's balance sheet. behaving ethically by reporting the loan to Tom as a trade account receivable? Why? 2. Who will be affected by Manny's decision? Complete this assignment as an essay using APA or MLA format. Your paper should have a cover page, 1-2 content pages, with an additional cover page (if using APA) and a reference page. For this assignment, refer to the Writing Resource links and file attached below. Be sure to support your position and properly cite your sources. ourse

Answer 1

New Wave Image is a Graphics design . Manny King the company Treasure and Vice President of Finance , prepared Balance Sheet as on December 31 . Manny needs to submit companies balance Sheet to Bank for application of Loan from First People Community Bank

While reviewing Balance Sheet analysis , noticed that an amount of $ 56000 loan to Tom Morrow the company President has been parked under “ Trade receivable “ Balance . On further deep dive we noticed that Manny provided loan to The Company president on verbal basis . The president will pay off this amount in next year time period . This complete transaction done orally , nothing through any paper document . The president tool this loan 18 months earlier .

Many as a Finance + Treasury , understand the sentiment of Bank and Bank can accept LARGE balance in Account receivable but can not accept any large amount of personal Loan to a Single Individual .

Manny reported the $56000 in the same manner on the preceding year Balance Sheet .

On the above analysis , we noticed couple of important point :

1. Manny is not giving correct , transparent financial to Bank
2. Manny as a Finance person , trying to manipulate disclosure of financial matter . Manny is very much aware that Banl will not accept any single large amount personal loan in the Balance Sheet . To manage this Manny try to manipulate number and disclosure
3. Trade receivable is ONE of the important factor in the Balance Sheet. Companies solvency , liquidity depends on Trade receivable balance .
4. Trade receivable balance ONLY connected with Customer transaction Balance . This account can not clubbed with any Staff Loan account .
5. Manny ideally need to disclose $ 56000 as Staff Person Loan and this should be documented proper way along with recovery plan .
6. Manny provided loan on Oral basis mean Manny is not following any Internal process or control
7. Manny is not adhering any process and doing high risk job – Not to follow companies documentation process as well as cooking, manipulate Financial number and disclosure
8. Manny is trying to clubbed a Single personal loan along with companies Trade Receivable to get Loan from Bank for Company purpose . This is absolutely Unethical in nature . Manny as a Finance President should not do this unethical work . This typoe of work increase more risky in the business .
9. Manny is trying to completely hide a big amount of personal loan in front of Companies stakeholders . Very interesting point to note that Manny followed same practice in last Year also so he is absolutely not following disclosure standard of financial as well as misrepresent number to Management of the company
10. Due to Manny this behaviour , company stakeholders will not get correct picture of the financial .

Bank also not able to find out any SINGLE Big ticket personal loan amount in the financial . Bank will see over all Trade receivable , normally they never go each and every client wise balance . So on the basis of this false financial statement , Bank can release good amount of money to Company .

The above process followed ny Manny is not ethical , following wrong practice and manipulate number of financial number to get additional benefit from bank which is most important to run, expansion of Business .