Redlands Manufacturing Case 4

In the recent years Redlands Manufacturing, Inc. has been audited and subjected to constant fiscal penalties due to fraudulent financial reporting on the companies part. Due to the following incorrect procedure the company has had to paid a tremendous amount fines: Channel Stuffing: Incorrect Practice: For financial gain, Redlands Manufacturing, Inc. shipped equipment to vendors with out a full merchant agreement and agreed to except returned merchandise back if it was not sold by yearend. This can inflates the sales figures which will increase your assets. By Redlands not recognizing the allowance for the merchandise when the products are returned, this results in false reporting of assets and cash flow. If accounting records of the company are reporting false monetary, then the company may over extend themselves. This is poor management and can be detrimental to the company. Vendor Dinging: Incorrect Practice: Redlands made a false claim to some of their suppliers. Stating the merchandise supplied by the supplier was damaged and in exchanged for customer satisfaction the supplier gave Redlands a discount on the merchandise order. In reality the merchandise was not damage but was used for regular company production. Redlands received merchandise at
Bacon about these inappropriate transactions and how specific practices of accounting that are set forth by the federal government to properly comply with all business in the US need to be followed. The accounting department provides organizational stakeholders with financial data about it’s operations, investments, and financing activities. Financial accounting provides information about the company to investors, creditors, and the public, if improper practices such as these acts stated above are reflected in company history then the Redlands can jeopardize the reputation of the company and lose potential and current