Question

Think about yourself as a future accounting professional and whether you think there may be situations where you may feel challenged to tell the truth and whether you feel equipped to handle from the accounting ethics perspective. Be specific.

Answer 1

Let's consider a situation where my senior manager has instructed me to record a transaction in an incorrect manner. For instance, the company i work with has a Dec. 31 year-end calendar year. The company signs contracts with consumers to perform services. The contracts are usually signed Dec. 1 and are a year in length. Accounting principles require the company to record the revenue for the contract for one month only i.e. the month of December. The remainder of the revenue is to be recognized on next year’s financial statements. However, i have been instructed to record the entire amount of the contract in December to boost revenues for the current year end. Management would receive a bonus for the boosted revenue and me, being a subordinate would receive recognition in an upcoming performance review.

Unfortunately, ethical dilemmas, such as the example provided above, are common. To help curb the desire to practice aggressive accounting and ignore ethical behavior, a number of organizations require accounting professionals to complete continuing professional education courses on ethics. In addition, a number of companies establish whistle blower hotlines to encourage employees to demonstrate honesty and integrity in the workplace.

In such situations, an accounting professional will be faced with an ethical dilemma. Whether to pursue for the individual and the team benefit available or to look at the bigger picture. The issue under consideration is that such situations are not taught in ethics, but it is inherent in an individual’s personality. If we consider the situation ethically, such matters should be reported. Whereas, the personal benefits available are also not ones to be ignored easily.

What would I, or any other accounting professional would do, can only be answered when such individual is in reality faced with such a situation.