Review of Accounting Ethics - Assignment Example

Other reasons behind such accounting ethical breaches are the avoidance of taxes, prevention from a legal or regulatory consequence, approving the loans from the financial institutions, etc. (Weil, 2012) The importance of accounting ethical breaches is highlighted more especially in the events when the public money is involved in the financing of the organizations. Such organizations which are keen enough to attract the external financing through representation of general-public are willing to portray their desired financial results to the upcoming investors of the organization.

By such ready-made results, these organizations tend to mislead the investors so that their shares can be fully subscribed and the company can raise their required amount of money in the first stance. Besides the accounting standards, there are some code of ethics have been issued by the regulators to assist the companies in making their financial statements more ethical. . Groupon Inc. went to general-public for raising external financing through issuance of shares to the common investors. The share price of the company surged from $20 to $31 on the first trading day of the shares of the company.

The underwriters of the company like Morgan Stanley, JP Morgan Chase, Credit Suisse, Goldman Sachs and others millions of dollars in creating a hype for this stock in the form of underwriting fee. With conservative estimations, it is believed that those investors who bought the shares of Groupon Inc. have lost some $9 billion in total since November 4, 2011, the first trading day of the Groupon Inc.’s stock. The share price of the company fell to around $13 from a high of $31 since its inception.

However, the original backer of the company’s shares, Mason, Eric and others kept their holdings with them and did not sell any portion thereof. On account of such holdings that they kept with them of the stocks of Groupon Inc., they received an incentive named as “payday” which was a fat reward for such endeavor (Weil, 2012). Financial analysts and critics believe that it was mainly the fault of the management of the Groupon Inc. using such aggressive accounting to cause such debacle. The accounting treatment of the company was so aggressive that the Securities and Exchange Commission of US had to intervene in the financial matters of Groupon Inc.

twice before the launch of its IPO. The accountants of the Groupon Inc. recognized the full revenues of the coupons that they sell to their merchants. The company booked all the revenues in this regard which heightened its earnings sharply just before the launch of the IPO. At that time, the analysts were