27th April 2010
A Person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies are stakeholders. Significant stakeholders in a business organization include creditors, customers, directors, employees, owners (shareholders), suppliers, and the community from which the business draws its resources. The stakeholders in this situation are Wayne Terrago, The vice president of finance, others who argued that it should be reported inventory, and finally the president who decided the issue.
The ethical issues involved in this situation are
If I was Wayne Terrago I would listen to the president because his statement “ the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offer. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.” makes more sense to help the company and to not hurt it. If I was a community member his choice would not be satisfying for me because of the Sarbanes-Oxley Act of 2002 (SOX) because it has important implications for the financial community. With the decision of the president I believe his was looking out more for the company then the community. This act also clarifies top management responsibility for the company’s financial statements, so I see why the president was able to decided what was best for the company.
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