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General Products

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Conservative Accounting in the General Products Division Case Analysis

Issues faced by Joanne and actions she should take
Joanne was the controller in the General Products Division (GPD) of Altman Industries Inc., a large industrial products manufacturer. The GPD reported higher profits than expected at the end of year. Joanne’s boss Robert Standish, the general manager for the GOD wanted Joanne to alter the financial statements for their division. Robert wanted Joanne to make the following changes: * Report this year’s profit in the next year, so that the profits can be used for Robert’s and his direct reports bonuses for the next year. * Not include any additional bonuses this year * Prepare pessimist scenarios to justify their actions. * Accelerate the expenses and deferred the revenues at the end of the year, to justify these adjustments.
Since, Joanne was aware that these adjustments are against the company’s accounting policies, she was uncomfortable to make these adjustments. She expressed her concern to Robert, but he ignored her and gave justifications for these adjustments. Joanne was in a dilemma on whether she should report against her own boss.

Joanne could have taken the following steps to handle this situation: * She should try to convince Robert that what he wants Joanne to do is not ethical and is against the company’s accounting policies. She could use an ethical model to list the alternatives and the positive and negative consequences for these alternatives. She could explain Robert his decision of altering the financial statements could have a negative impact on the entire division. * She could follow the model in the Appendix A and analyze the situation and take her decision accordingly. * If she believes that the decision taken by Robert is unethical and against the company’s accounting policies she can

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