Accounting homework help

/in /by

Accounting homework help. Development of an Ethics Foundation: Case Study-Media Tech, Inc. 
Identify the issues, define your ethical decision making model and ethical theory, explain the options and consequences, and pick the solution you would choose and why for the following situation:
Laura, controller and CPA, has been working hard to finish the year-end financial statements for Media Tech, Inc.
Media Tech Inc. provides social media relationships between users by focusing on up-to-the- minute communications on events–kind of like Instagram. This year is critical for the firm. The company is expected to make a profit after five years of product development and losses. In working to complete the year-end financials, Laura finds out that the figures are not logical. In fact, it seems that the company has overstated assets and income by $300 million. Based upon the brief investigation that she has been able to complete; it seems that both the CEO and CFO have signed and approved some documents that have inflated the numbers. The documents indicate a realization and recording of social media customer valuation of future sales into the present accounting period. Every social media customer for the firm generates advertising revenue equal to $5.00 per year. The documents indicate that the Social Media customer revenue for the year was increased to $7.00 per customer. The incremental revenue was booked on December 30. This leads to an increase in revenue of $300 million and accrual long term account receivable of $300 million.
Laura is pressured by time (a filing deadline of tomorrow to get the financial information finalized and printed for the shareholders’ meeting) and the following other considerations:

  • The      shareholders have been promised by the founders of the firm that an      Initial Public Offering (IPO) of the company will be done within the next      year. Morgan Stanley has been hired to provide the financial advice on the      IPO issuance. The benefits to the stockholders are in the millions.
  • Laura      is a go-getter; she wants to succeed in the company. She sees herself as a      CFO in the future. Laura has been with the company for five years. She was      one of the first employees hired. She has had excellent annual performance      reviews. Upper management sees Laura as part of the team.
  • Laura      is a CPA. She has joined the State CPA organization and the AICPA      organization. She has viewed and passed the AICPA Code of Professional      Conduct Certification.
  • Laura      has personal pressures since she recently bought a new $500,000 house      using all her savings as a down payment of $100,000. Further, her husband      recently has taken an unpaid leave from his job due to a difficult illness      and medical bills are mounting. He fell at work and needed serious back      surgery. He needs special nursing care during the day. Laura helps at      night as much as she can.
  • The      banks have been patient in providing lending to High Tech, Inc., during      the rough times but will declare the loans in default and demand immediate      repayment if the numbers are not near break-even.

Answer the following questions:

  1. Using      the AICPA Code of Professional Conduct, describe how this was either      applied, misapplied or completely ignored. How would this code help Laura      in her decision?
  2. Using      the COSO Internal Control—Integrated Framework Executive Summary, describe      the internal control weaknesses. Provide your recommendation for how to      tighten up the controls for Media Tech based on the COSO summary.
  3. Explain      some of the actions of Media Tech leadership and the audit team based on      the Fraud Triangle. Explain how Laura is being pressured in this      situation.
  4. Using      a virtue ethics approach, explain the shortcomings and describe how these      principles could have benefited Media Tech?
  5. How      would the duty-based concepts of deontology help Laura in her decision?
  6. Describe      how Media Tech might have altered their choices if they would have been      operating in the mode of transparency and in the best interest of various      stakeholders (stockholders, community, employees, creditors)?
  7. How      might the consequentialism ethical theory have influenced the decision by      the CEO and CFO?
  8. What      might be the criminal and punitive damages under SOX to upper management      if they certify this year’s financial statements?
  9. What      could be the result for Laura if she goes along with the current      statement? What could be the result if she opposes leadership?
  10. What      are your final suggestions to Laura?

Requirements:

  • Your      written paper should be 10 pages in length not counting the title and      reference pages, which you must include.
  • Integrate      concepts, terms, and theories from the readings and modules contents.
  • You      need to cite at least 5 sources for this portfolio project, outside of the      textbook. Four of these sources must come from academic journals.
  • Your      paper must be formatted according to APA format.

Accounting homework help