Although Anne, the CEO, and Sue, the accountant are involved in this decision it is the banks, Linkage Construction Inc. employees and investors, and subcontractors if any are used are the affected stakeholders involved in this decision.
2. What are the ethical issues involved?
The ethical issue involved is changing the expense report to show lower expected profits for the current year just to manipulate the growth trend of the company which is against GAAP and ethical standards of accountants. 3. What should Sue do?
The facts are that there are several stakeholders that will be affected by the decision. The stakeholders involved are the banks that would be extending loans to the company based on false information. The investors will be affected because their profits may come in lower based on the lower profits that would be stated, the employees could get lower bonuses, and the subcontractors if any would be looked at as they are not doing a great job by being on or ahead of schedule. The company could be affected because the culture would change to it’s OK to cut corners or lie on reports to make it all look good. The most important stakeholder is the public and the bank because they would be directly affected by the unethical behavior. The ethical issue is that they would be changing the expense report to show lower expected profits for the current year just to manipulate the growth trend of the company. The bank will be making loans to a company that is not averse to doctoring the books and the consequences could be that in future years the company may not show as much profit and the loan could go into default. The public would be subject to the fallout because they will be footing the bill. Sue should definitely not do what Anne wants because it is against ethical nature of accounting when it comes to protecting the public interest, it will affect the company’s rating if found out and the...