Ethics in Accounting

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In Ethics Case BYP5-6, we are presented with a seemingly harmless accounting issue. Laura McAntee has just been hired as an assistant treasurer for a large retail store. Her new boss used to have her position but has since been promoted to treasurer. While explaining her new duties, he has asked her to date checks to pay invoices at a discounted rate, but hold on to the checks in order to gain interest on that money. He continues to explain away the practice by saying “everyone does it” and that the creditors need the business and will take it. Ethical Considerations

The ethical consideration in this case is that Danny Feeney, Laura McAntee’s new supervisor is asking her to commit fraud in order to make financial gains for the company. This is a practice that Mr. Feeney had previously established as he was the assistant Treasurer in charge of making sure the company’s high credit rating was maintained and taking advantage of cash discounts. The retailer has a centralized location for all its accounting, so there was no “check and balance” in place. Because Mr. Feeney was able to keep the company’s credit rating high and was able to get the company’s creditors to accept late, discounted payments the practice has continued and he was ultimately rewarded for such activities. Stakeholders

There multiple stakeholders in this situation who are both being harmed and benefitting from this practice. The stakeholders that are being harmed from this practice are the creditors, the creditors’ other customers, and potentially Laura. The creditors are being harmed the most in this practice because they are losing out on revenue. By taking advantage of the discount, the creditors have to record their merchandise at a reduced cost. This takes away from potential profits for the company. This could trickle down and affect the other customers of the creditors. By having to record merchandise at a reduced cost, the creditor could pass that loss onto other customers....
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