Monday, October 14, 2019
The Big Decision Essay Example for Free
The Big Decision Essay An accountant is expected to be both an accountant and a professional. An accountant should follow general professional obligations. After the incidents involving Arthur Anderson, Enron, and WorldCom, the role of a professional accountant was changed. Brooks (2007) stated, Ã¢â¬Å"Professional accountants owe their primary loyalty to the public interest, not just to their own financial interests, company directors or management, or current shareholders at the expense of future shareholders. Ã¢â¬ (Chap. 1, p. 22). Decisions made by executives should reflect their corporationÃ¢â¬â¢s ethical values. In knowing this information, the case of Daniel Potter and his employer Baker Greenleaf raises some concern. I will address the dilemmas of the case, the stakeholders involved, and the course of action that Daniel Potter should take. (Brooks, 2007) Baker Greenleaf is a large accounting firm. Actually, they are one of the Big Eight accounting firms. Daniel Potter was a recent graduate of an Ivy League school before working for Baker Greenleaf. He understood the values and work ethics that he should follow. There came a time when he was assigned an account which was not new to Baker Greenleaf. The account was very important. In the past, Baker Greenleaf shared the account with another Big Eight accounting firm. Baker felt that they should be the only accounting firm that serviced that long-standing account. In order to achieve this, they believed that they needed to deliver a satisfactory performance in their auditing services with the company. After Dan completed the audit, he discovered concerns in which he could not solve. DanÃ¢â¬â¢s estimate and the balance sheet value of real estate property resulted in a difference of opinion which significantly affected the income statement by more than three percent. DanÃ¢â¬â¢s first reaction was to include a subject Ã¢â¬âto-opinion proviso, which included his findings, along with his report. His supervisor disagreed with his actions and wanted Dan to issue a clean opinion. At the end of the day, DanÃ¢â¬â¢s supervisor removed DanÃ¢â¬â¢s investigation from the files and replaced it with a clean opinion. He also delivered a negative evaluation of DanÃ¢â¬â¢s performance on the audit. The dilemma in this case is that Dan was undecided as to the course of action he should take regarding his analysis that was replaced with his supervisorÃ¢â¬â¢s clean opinion (Brooks, 2007). The stakeholders involved in this case were investors, clients, buyers, as well as the company who was presented with the audit. Since the value of the property was inflated to almost two million dollars over its actual value, buyers were being misled. With Baker Greenleaf basically putting their stamp of approval on the audit, they are taking part in their clientÃ¢â¬â¢s scheme. Baker is more concerned with profits than with the ethical values they should uphold. If the public ever found out about this scheme, the company could possible go out of business and investors could stand losing a great deal of money. Investors, clients, as well as buyers of the real estate are entitled to be aware of the activities that are taking place in the company. LetÃ¢â¬â¢s discuss some of the processes of decision making as well as the actions that should be taken. In order to make ethical decisions, accounts should possess values of integrity, honesty, objectivity, skill and discretion. They should also exercise due care, professional skepticism, and pledge to place the needs of the public, the client, the profession, and the employer or firm before the professionalÃ¢â¬â¢s own self interest. In making an ethical decision, Dan should follow the framework for ethical problem solving which involves eight steps. He should first establish objectivity. Baker Greenleaf is doing the analysis. Their interest is to acquire the long-standing account. The ground rules of the company seem to be honesty and professionalism since the real estate subsidiary gave them problems in the past (Brooks, 2007). Next the problem needs to be identified. The problem is that DanÃ¢â¬â¢s supervisor does not want to submit a report that discloses negative information on the real estate subsidiary. The subsidiary fabricated the value of their larges real estate property at two million dollars when it was actually valued at no more than one hundred thousand dollars. This problem that has been uncovered belongs to the subsidiary as well as Baker Greenleaf. It is a problem for the subsidiary because they are misleading their real estate buyers on the value of the property. Their buyers will buy a property in excess of the amount that is essentially worth. Baker Greenleaf can be help liable for real estate property bought by buyers that was overpriced. Third, Dan should use the five-question framework to analyze the situation. Since Baker Greenleaf is one of the Big Eight accounting firms, they should have ground rules that govern all of their accountants to abide by all rules and possess ethical decision making skills. The stakeholders are the clients and buyers of the subsidiary as well as the subsidiary and Baker Greenleaf. The subsidiary has a right to make any decision regarding their company and their asses, but any decisions related to the audit of the subsidiary are made by Baker Greenleaf. It seems as of the ground rules of the subsidiary are to carry out any means that will generate the most profit for the company. They do not have any ethical principles or rules. Their current rules and principles are not fair to all concerned. Fourth, Dan ought to determine the cause of the problem. The rules are being broken so that the company can make a bigger profit. The rules are being broken Prima facie. After reviewing the evidence, the problem was discovered. DanÃ¢â¬â¢s supervisor doesnÃ¢â¬â¢t posses ethical values. He is only concerned about how he will be perceived by the executives within the firm. After that, the objective must be established. The desirable outcome is to report a subject-of-opinion to indicate the material difference in opinion regarding the value of the subsidiaryÃ¢â¬â¢s largest real estate property. Dan wanted the executives of the firm to be aware that the financial statements were subject to a $1. million dollar adjustment. The timeframe is within the next couple of days. This is measurable. Next, Dan needs to explore his options. Dan can raise his concerns with his partner counselor as well as the personnel department along with any evidence he has exposed. He can also quit the job and look for anther place of employment without any attempt to inform someone else of his findings. The seventh step is to decide on the best solution. If Dan goes to his partner with his concerns, they may or may not look into the situation. If he leaves Baker Greenleaf without informing someone else, they may still have this problem without any knowledge of it. They could possibly be sued by their negligence. The decision to that should be implemented is to inform DanÃ¢â¬â¢s partner counselor as well as the personnel department. It may affect his supervisorÃ¢â¬â¢s creditability but the credibility of the firm is much more important. The final step for Dan is to plan and implement the decision. He should gather all evidence showing his findings as well as document when he spoke to his supervisor about the issue. He should also document what was discussed. In the case of Dan and Baker Greenleaf accounting firm, we reviewed the dilemmas of the case, the stakeholders involved, and the course of action that Daniel Potter should take. If the public could bust down the doors of corporate headquarters and demand financial information, then we may not need accountants to validate the information. For now, we must comply with the laws and hope that the people we believe in being honest and ethical continue to be responsible and never forget that the public stakeholders.