Assume that the CEO and CFO are very adamant that the bad debts percentage be reduced...

Assume that the CEO and CFO are very adamant that the bad debts percentage be reduced in 2017 to 2% of year-end receivables. The 5% difference is not material to the financial statements. You believe that you will be terminated if you don’t make this adjustment. What should you consider in making your decision?

Expert Solution

Points to consider in making the decision:

1. Generally Accepted Accounting Principles (GAAP) needs to be considered. In case of any change in methodology, there should be an appropriate/reasonable reason for such change and does not affect any stakeholders involved.

2. The chnage is clearly a benefit to the CEO and CFO which is why they are very adamant that the percentage be reduced. If it is not done, the job is at stake. If done, it will be the violation of the GAAP and other accounting policies and principles, it can also have a negative impact on the job. The consequences needs to be considered.

3. Any such adjustment can be easily found in the audit and I might have to bear the consequences of providing misstatements which does not show true and fair view of the organisation.

4. Ethics and professional code of conduct needs to be considered.

5. Personal factors such as job security will be taken into consideration especially where there is huge unemployment in the current market.

ekkarill92 answered 1 year ago

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