Example Of Research Paper On Ethics Memorandum
The enterprise’s transaction rules and regulation have been violated as well as accounting professional ethics by the material misstatement that was evident in the company’s financial books of account. A thorough investigation should be conducted to deal with the pending issue and in order to avoid future misappropriation of the company’s assets. It will enhance keenness as the obedience to all rules, regulations and the laws governing the operation of the organization is concerned. Material misstatement in the financial statement is the inappropriate entry that can seriously affect the company’s income because the set objectives will be hard to achieve in the stipulated time. It is an action that was noticed in the organizational books of account and it is advisable to ensure that external auditors are informed in time about the issue, so that the employees who tabard or involved in the action are known before their action messes the entire company. The organizational ethics based on rules and regulation, accountability, and transparency, should be implemented in the right manner and no employee in the enterprise should be excluded. It is because everybody in the company is equal before the State’s statutes and ethics of the enterprise.
Purchases accounts entry based on the materials that were bought from the company’s supplier was wrongly recorded by the department concerned, and it came to the notice that up to date it has not been changed. It is a clear reflection that there were plans made by unknown members of the staff to benefit from that transaction. According to the ethic laws governing accounting as a profession, every transaction conducted in any enterprise must be strictly followed because this can lead to punishable actions taken against the involved parties. Purchasing account when incorrectly recorded simultaneously affect the company’s income statement that analyzes the gross income of the enterprises at the end of each financial year. The misstatement will end up affecting the financial statement as the company’s income is concerned, and it will lead to an imbalance of the calculation made (Mark and Michael76).
In this situation, there are four parties that must be investigated about their accountability, transparency and the lack of clarity in recording of the purchases accounts and income statement. These parties include those involved in the transaction which are, the procurement manager, the supplier, the accountant who recorded the transaction and finally the internal auditors of the firm because they should have noticed the mistake made in time (Mark and Michael76).
In this case, the company’s transaction rules, the agreement signed between the enterprise and the supplier have been violated, thus a thorough investigation should be conducted since this is a crime punishable as the state’s statutes stipulate. The company should also consider conducting a serious audit of all company’s financial statements in order to gather evidence that should be submitted in the court of law after tracing the individuals involved in the current experienced scenario.
The supplier who was involved in the case should be answerable for breaking the agreement set on transparency and accountability. It is since that was an infringement of contract as the contract rules based on offer and acceptance had been broken. The state’s laws and the laws governing the company are well structured, and they should be addressed in this case. Both of the laws stipulates that transparency and accountability should always be adhered to but, in this case, the principles are manipulated and the parties involved have to face the wrath of the law in the court. It is stated that every employee in each department must always observe the professional code of conduct in their area of specialization (Mark and Michael76).
Industrial standards advocate that honesty, consistency and aspects of being straightforward should be adhered to every time. In this case, those aspects have been violated, and it is not of the company’s interest at all. Trustworthiness should also be incorporated in the accounting sector because accounting profession encourages all individuals in that career to ensure cash is not lost (Steven 66).
Ethical theory encourages all individual in every professional field to consider integrity standards in their daily activities because without them the success of the companies or any organization will be doomed. As it pertains accounting’s field clarity of the organizational, financial statements should be observed every time since failure to that can lead to fraud. Thus, the parties involved in that case will be accused of fraud in the court of law as the material misstatement resulting to losses in the company may block the achievement of the set objectives (Mark and Michael 55).
Conclusively, the organizational management should take immediate action in this case because if ignored it will lead to unexpected losses at the end of the financial year. Materials misstatement that have been evident can be just a beginning of more violation of the laws governing the company’s operation. A thorough investigation should be done by external auditors to verify the current case and if there are more similar instances that had been carried out without the knowledge of the company. In accordance with the above discussed points, it is evident that there are several laws, rules and regulations that have been violated and the appropriate action should be structured to ensure the issue is addressed. As we know the company is not owned by the workers or the board of directors but by the shareholders who if not informed of the situation will not know. Laws can still be broken, and this should be taken into consideration because if not for laws the company should not be existing in the present day. Fraud is a crime that has been committed by the parties involved in the transaction and the States statutes stipulated a clear punishment for it. It has been evident in the current case, and the appropriate action should be addressed by the Country’s Constitution and company governing laws.
Cheffers, Mark, and Michael Pakaluk. Understanding Accounting Ethics. Sutton, MA: Allen David Press, 2007. Print.
Bragg, Steven M. The Ultimate Accountants' Reference: Including Gaap, Irs and Sec Regulations, Leases, and More. Hoboken, N.J: Wiley, 2013. Internet resource.
Bragg, Steven M. Accounting Policies and Procedures Manual: A Blueprint for Running an Effective and Efficient Department. Hoboken, N.J: Wiley, 2013. Internet resource.