Purdue Global University Acco

Read the textbook scenario (Ethics Case, p. 18–51) and address the checklist questions located below:

René Kelly, president of RL Industries, wishes to issue a press release to bolster his company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other operating statistics for RL Industries’ first quarter financials and operations.

Two days after you provide the data requested, Erin Lourdes, the public relations director of RL, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Erin. In the news release, the president highlights the sales increase of 25% over last year’s first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. She also emphasizes that production was up 50% over the prior year’s first quarter.

You note that the press release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that although the current ratio improved, the accounts receivable turnover fell from 12 to 9. Nor is there any mention that the quarter’s reported profit would have been a loss had not the estimated lives of RL plant and machinery been increased by 30%. Erin emphasized, “The press wants this release by early this afternoon” (Weygandt et al. 2021, p. 18–51). 

1) Who are the stakeholders in this situation?

(2) Apply two or more accounting codes of conduct to answer the following questions:

  1. Is there anything unethical in President Kelley’s actions?
  2. Should you as controller remain silent? Does Erin have any responsibility?

(3) Then compare your response regarding the accounting code of conduct questions above to the tutorial’s ethical approaches.

  1. Which accounting code of conduct responses to questions “a” and “b” above would be supported by two of the ethical approaches in the tutorial? Explain                                                                                                                                                                                                                                                                                                                                  René Kelly, president of RL Industries, wishes to issue a press release to bolster his company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other operating statistics for RL Industries’ first quarter financials and operations.Two days after you provide the data requested, Erin Lourdes, the public relations director of RL, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Erin. In the news release, the president highlights the sales increase of 25% over last year’s first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. She also emphasizes that production was up 50% over the prior year’s first quarter.You note that the press release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that although the current ratio improved, the accounts receivable turnover fell from 12 to 9. Nor is there any mention that the quarter’s reported profit would have been a loss had not the estimated lives of RL plant and machinery been increased by 30%. Erin emphasized, “The press wants this release by early this afternoon” (Weygandt et al. 2021, p. 18–51).

Purdue Global University Acco

You are an accountant in the budgetary, projections, and special projects department of Fentick Conductor, Inc., a large manufacturing company. The president, Carlos Jones, asks you on very short notice to prepare some sales and income projections covering the next 2 years of the company’s much heralded new product lines. He wants these projections for a series of speeches he is making while on a 2-week trip to eight West Coast brokerage firms. The president hopes to bolster Fentick’s stock sales and price.

You work 23 hours in 2 days to compile the projections, hand-deliver them to the president, and are swiftly but graciously thanked as he departs. A week later, you find time to go over some of your computations and discover a miscalculation that makes projections grossly overstated. You quickly inquire about the president’s itinerary and learn that he has made half of his speeches and has half yet to make. You are in a quandary about what to do (Weygandt et al., 2021, p. 24–50).

Reference

Weygandt, J. J., Kimmel, P. D., & Mitchell, J. E. (2021). Accounting principles (14th ed.). Wiley.

  • Write your original response in a 2-page paper using Standard English, paying special attention to grammar, style, and mechanics.
  • Format your paper to be double-spaced, have 1-inch margins, and use Times New Roman 12-point font.
  • Respond to the questions in a thorough manner in your essay.
  • Ensure that your viewpoint and purpose are clearly stated.
  • Demonstrate logical and appropriate transitions from one idea to another.
  • Your paper should be highly organized, logical, focused, following citation APA format and citation style (see Unit 1 Reading area for assistance with APA).
  • Your 2-page essay should include an additional title page and a reference page. 
  1. What are the consequences of telling the president of your gross miscalculations?
  2. What are the consequences of not telling the president of your gross miscalculations?
  3. What are the ethical considerations for you and the president in this situation?
  4. Which code of conduct principle would you act on from the professional codes of conduct guiding ethical behavior in this field? Provide the organization’s name, and the code of conduct which pertains to why you act, and then provide the url for your source.
  5. Based on your chosen code of conduct principle(s), what would you do (step-by-step) to act in accordance with your chosen principle to address this situation? 
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