...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...
Words: 1175 - Pages: 5
...RUNNING HEAD: EXCELLO TELECOMMUNICATIONS CASE Excello Telecommunications Case Kevin C ETH/376 February 10, 2014 Excello Telecommunications Case The year is quickly ending for Excello Telecommunications, and they are trying to maximize earnings for the company. With increased competition from foreign companies, Excello meeting its financial estimates are looking bleak. Failure to meet earnings expectations can reduce the availability of bonuses, stock options and could lessen the value of the company. Because of the threat in not meeting estimated earnings, the company’s CFO Terry Reed has a plan to make one last effort to meet company goals. Terry Reed has knowledge about a sale of $1.2 million to a customer in December 2010 and wants to move the sale quickly. Because of storage issues by the Data Equipment, the sale will have to occur in January 2011 when the buyer will have adequate space to hold the equipment purchased. Terry wants to make the revenue at all costs and will do whatever it takes to make it happen. That type of motivation can create questionable decision making that can potentially violate laws and the AICPA Code of Conduct. Excello Legal Issues The failure to meet earnings estimates are of significant concern for the organization where it will prompt questionable decisions by executives. Excello Telecommunications must adhere to accounting practices and regulations in the organization’s activities to ensure financial...
Words: 1601 - Pages: 7
...Reporting 2-25-2013 Ethics 376 Phoenix University Unethical Practices are forbidden in every industry but at the same time they are also performed. Unethical practices occur when a business does “not conform to approved standards of social or professional behavior”. ("The free dictionary,") There are many situations that can lead to unethical practices and behaviors within the accounting profession. The Sarbanes Oxley Act of 2002 was put into effect to prevent a lot of these unethical practices. In every business owner’s life, there comes a time when a decision must be made, that if is made in favor of the company and/or for personal benefit will be considered unethical. The business owner is the person who sets the standard for his/her company. He/she is the person who sets up guidelines that demonstrate the contrast between ethical and unethical values and behavior, establishing the first step in creating a company culture emphasizing and reinforcing ethical standards. In the accounting industry, professionals not only have the standard practices of accounting but also, board accountancy rules, such as SOX and GAAP, when creating ethical standards. Federal and state laws play a big consideration during this time. Such a time came for CFO of Excello Telecommunications when he considered inappropriately posting a $2.1 million transaction to boost year-end earnings. At the end of 2010, Excello faced the possibility of not meeting...
Words: 1350 - Pages: 6
...The Ethicality of Excello Telecommunications Cody S. Smith ETH/376 April 22, 2013 Ding Hardin The Ethicality of Excello Telecommunications Excello Telecommunications has been a profitable company for many years, but recently the competitive landscape has become tougher. Competition from overseas manufacturers has lowered Excello’s market share and profits. For the first time it looks as is Excello will not meet earnings estimates. This information directly impacts bonuses, stock options, and the company’s share price. Top level management is concerned about the extent this impact will have on the company. This paper will serve to determine the ethicality of Excello’s actions and demonstrate what ethical standards and regulations are acceptable under GAAP. Possible Solution and Dilemma Terry Reed, the chief financial officer, uncovered a transaction on December 20, 2010 that might solve the problem. Excello sold $1.2 million of equipment to Data Equipment Systems. Typically this type of transaction would be recorded as a sale on the date of shipment. However, Data Systems has requested that the equipment not be delivered until January 11, 2011, because Data Systems did not have the warehouse availability for the product. Ethical Standards and GAAP Excello is faced with a serious problem. The company must record this revenue for the period ending 2010, but the transaction is not set to complete until 2011. The first issue that must be detailed is how and when revenue...
Words: 1376 - Pages: 6
...Legality and Ethicality of Financial Reporting Jacqueline Carr ETH/376 December 17, 2012 Samuel Hinton Legality and Ethicality of Financial Reporting Excello Telecommunication is a very successful business; however, just recently they have been experiencing some heavy competition in the businesses industry. Terry Reed the businesses CFO has realized the business is not going to meet the years estimated earnings, which can cause problems meeting financial responsibility to the stakeholders. Terry Reed found a transaction which can help the business meet the financial responsibility; however, in order to apply the transaction, he must first find a legal and ethical way off reporting the transaction on the financial report. The transaction in question, the product was sold on December 20, 2010 for $1.2 million; however, the receiver of the product is not able to take control of this product until January 11, 2011. Terry Reed needs to find a way to record the transaction before December 31, 2010 in order to meet their obligations. The accounting principle for reporting on the financial statements is the product must be posted in the quarter the product leaves the warehouse. (Mintz, S., Morris, R.E, 2011). In the accounting world, there are several different agencies, which regulate the reporting of financial statements. These rules and regulations protect the stakeholders and public from any wrong, fraudulent reporting and unethical behavior. The main agencies are (SOX),...
Words: 1371 - Pages: 6
