Ethics of Rerouted Accounting
Steven J. McQueen Jr.
ETH/376
November-24, 2104
Sylvia Baughey

Ethics of Rerouted Accounting
Excello Telecommunications had pitfalls in the year of 2010, this is clear by the fear exuded by their CFO, Terry Reed. The fear of earnings estimates wouldn’t be met amplified by the consequences of this circumstance compelled Mr. Reed to look for a way out. The effect on bonuses, stock options, and even the share prices of Excello made Mr. Reed emulate behavior outside the scope of ethical behavior and he subsequently enrolled the help of subordinates in such a way that violated conduct protocol. The sale of $1.2 million of equipment may have seemed irrelevant until Mr. Reed began his quest to have that amount recorded in 2010 instead of the date the equipment would actually change ownership.
A summary of Section 302 of the Sarbanes-Oxley Act reads “The report does not contain any material untrue statements or material omission or be considered misleading…” (SARBANES-OXLEY ACT OF 2002, 2006) As CFO, Mr. Reed’s thought process of re-directing the transaction’s entry to reflect in 2010 to increase numbers for his earnings statements is simply that, misleading. Section 401 of the Sarbanes-Oxley Act reads “Financial statements [that] are published by issuers are required to be accurate and presented in a manner that does not contain incorrect statements or admit to [the] state material information.” (SARBANES-OXLEY ACT OF 2002, 2006) These two statements involve everything that Mr. Reed is attempting to do. He is trying to bend the truth around a transaction that hasn’t occurred, in order to produce false earnings in 2010 to better reflect on the earning statements.
The AICPA Code of Professional Conduct serves as a foundation of ethical reasoning in accounting. The general standard of competence standardizes that members of the AICPA