Ethical Case Study Assignment

[Ethical Case Study]

[Name]

[Financial Accounting Theory and Practice]

[University]

[Instructor Name]

[April 30 , 2010]

ANSWER 1

Vinal Barbaros , the controller of Smith Construction , has two options available in this case either he can understate the cost statement to make his boss happy or he can be an ethical person and refuse to do any adjustments , the end result of which will be that he will be forced to leave the job . However , these two options should be evaluated in detail

The first option is that Barbaros should

understate the costs as instructed by his boss , Michael Wolman . This option has numerous ethical implications for the stakeholders . Firstly , the stakeholders in the company including the management will get favorable financial statements which will help the company in repaying its loan to the National Bank of Australia . Secondly , by repayment of its loan installments on time , the company can renew a 2 million loan which will help Smith Construction in many ways . The effect of this option to Barboras personally is that he will get an inducement of 5 to be added to his salary which is a great incentive . Secondly , it is also reflecting that Wolman has no intentions of firing him now . However the problems which the company is facing will not be solved if Barbaros accepts to understate the costs The problem will further aggravate if the auditors find out the discrepancy and present the report to National Bank of Australia . In this case , the bank will not...