Ethics Case Directions - Essay Example

The ethical dilemma at hand in this particular situation is one that is contingent upon accounting standards and the methods through which in common is represented. Ultimately, the needs of two distinct stakeholders are at hand. The first stakeholder is obviously the individual who is interested in representing a higher level of earnings/income so that he may be eligible for a year end bonus. By means of contrast in comparison, the second group of stakeholders are those individual shareholders of the firm itself.

Naturally, when individual shareholders note that the overall level of worth that their particular shares of the company denote has fallen, as compared to a previous year, they may very well be interested in selling the remaining shares that they have; resulting in a decrease the value for the firm and a situation in which the overall longevity of this entity falls into further question. From an accounting ethics standpoint, the representation of information is an extraordinarily important facet of honesty and truthfulness.

As such, seeking to represent the two values of “unearned revenue” and “payments in advance” as worthy of inclusion in the firm’s untaxed revenue would be a stark departure from the way in which such values were listed previously. In such a way rather than choosing between including these values in the overall total or refusing the request outright, a third path is possible. If this issue is one of such importance that they lead accountant feels it is necessary for inclusion, they can indeed perform such a function; Yachting this with a description and discussion of why this numerical change has taken place as compared to the prior year’s accounting report.

However, this particular change must then be engaged in subsequent years and discussed it with stakeholders within the company that any potential changes in the accounting practice will have to be related to all stakeholders and clearly denoted in terms of an explanation within the year-end balance sheets. Whereas it is not illegal or unethical to change the way in which certain information is represented, so long as no laws are broken, going above and beyond this requirement and insisting that stakeholders are kept apprised of the way in which information is related is one fundamental way in which this ethical dilemma could be averted.

In the eventuality that stakeholders within the company do not feel comfortable with relating the information in the way that the accountant has propose, the only other alternative would be to leave these two line items out of the final untaxed revenue entirely. The underlying reason for this is that changes in accounting representation, year-to-year, without any level of effective explanation creates a situation in which the overall truthfulness in representation comes into question. Whereas it is possible for the firm to engage in such a practice without breaking the law, such an approach would not be fair to the shareholders and would create further problems within subsequent years of accounting practice.