Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 16

Assume you are a CPA and the controller of a Fortune 500 company. On January 2, 2011, your boss, the CFO, comes into to your office to discuss the recording of revenue on a shipment of product received by the customer on that day. Your boss hands you the sales invoice that reflects F.O.B. Destination terms and tells you to backdate the document for the $20 million shipment to December 30, 2010. What ethical issues should you consider in deciding whether to agree to the request? What provisions of the AICPA Code are relevant to your decision? What would you do and why?

Step 1 of 2

Ethics:

Ethics in the accounting profession is defined as guidelines and principles. It includes laws and standards of behavior.

AICPA

AICPA stands for the American Institute of Certified Public Accountants. It is founded in 1887. AICPA is set up in the United States and it is the national professional organization of Certified Public Accountant.

Role of AICPA

1. It set a standard of ethics for the best practice for accounting.

2. Create guidelines with the new legislation.

3. In relation to accepted accounting practice (CPA) its monitors service quality.

AICPA is designed to resolve the issue related to the audit and preparation of an audit report by the CPA. The AICPA’s provide a higher professional manner benefits to the public, employers, and clients. There are more than 40,000 members in 128 countries in AICPA including government, industries, and international associates.

FOB destination:

FOB destination is defined as a point where ownership of the goods and service transferred to the buyer from the seller.