You are the accountant for ACC KarParts, a thriving company that makes auto parts. You oversee all accounting functions within the company. Quinn, your supervisor, has informed you that if the company’s profits grow by 30% this year, you will receive a $30,000 bonus, and she will receive a $60,000 bonus. No bonuses will be awarded if profit growth is less than 30%. Near the end of this fiscal year, the two of you have the following conversation:
- Quinn: We are getting close to 28% profit by the end of this year. If this happens, neither you nor I will get any bonus. What can be done to reach our target and get our bonus?
- You: There is nothing we can do to reach 30% profit this year. However, we can plan to reach that target next year.
- Quinn: If we claim some of the next year revenues to be part of the current year, you will get your bonus, I will get mine, and the investors will be happier. Therefore, everybody will be happy.
- You: Uh, Quinn, that would be an unethical action.
- Quinn: We are simply moving revenue from one period to another. We are not faking the revenue transactions.
As an accountant, what would you do in this situation?
Write a 23 page report explaining to Quinn why you can’t move revenue from one period to another. In the report:
- Explain the importance of ethics in accounting.
- Apply ethical principles and professionalism to the case at ACC KarParts.
- Based on generally accepted accounting principles, recommend at least three acceptable legal alternatives to meet company goals.
- Use three sources to support your writing.