Legality and Ethicality of Financial Reporting

Pages: 3 (1214 words) Published: May 21, 2013
The Excello Telecommunication has been a very successful business until shortly there were some issues with the competition within the companies industry. The CFO of the Excello Telecommunication is Terry Reed, who has realized that the business will be short on the earnings this year. With this going on will cause problems with the financial responsibility toward the stakeholders. Mr. Reed located a transaction within the business that will work for the businesses financial responsibility, but with this transaction Mr. Reed would need to locate some legal and ethical ways to report this transaction on any of the financial reports. The transaction that Mr. Reed questions about was first sold some products on December 20th, 2010 for a total of $1.2 million, but the receiver of this product cannot take the accrual product until January 11th, 2011. Mr. Reed had to find a way to record this type of transaction before December 31st, 2010 so he had to post this transaction in the same quarter that the products were leaving the warehouse (Mintz, Morris, 2011). Within the accounting world there are a few different agencies that can regulate the financial statement reporting. With these rules and regulations working they help the stakeholders along with the public to be protected from doing wrong reporting or any unethical behavior. There are three main agencies threw out the accounting world, (1) Sarbanes and Oxley Act of 2002 (SOX), (2) Generally Accepted Accounting Principles (GAAP), and (3) the AICPA Code of Professional Conduct. The Sarbanes Oxley Act of 2002 was first started in July 2002 and was named after Senator Paul Sarbanes and Representative Michael Oxley were the main architects that had non-negotiable deadlines many times. The Sarbanes-Oxley Act contains eleven titles total but to name a few titles there are 302, 401, 404, 409, 802, and 906. The Generally Accepted Accounting Principles is the common accounting principles, procedures, and standards that one...
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