Financial Accounting Unit 2 Discussion Post
By Donielle Davis
Being that I am the division manager of this large public company and I've been working hard all year I would really be happy to get my $25,000 bonus for meeting the year target of $1.5 million. If I place the order for the supplies in anticipation of the seasonal rush for $150,000 my bonus could very well be comprimised. I have two choices either I can record the expense this year or I could hold out and record it in January.
I feel like I would need to be honest and record the expense because if I don't that would be unethical. You shouldn't fix financial statements especially for personal financial gain. This is one of the reasons I feel like managers should have no knowledge of earning a bonus for meeting yearly target, it should just be a surprise. Receiving a personal bonus is never a good reason to postpone reporting financial information. This is one of the reasons the Sarbanes-Oxley Act of 2002 was created by Senator Paul Sarbanes and Representative Michael Oxley. This act eliminates corporate scandals like the scandals that came about with Enron, WorldCom, and Tyco. (www.sox-online.com)
One way that I possibly could meet the $1.5 million goal and still record the expense is I could increase production. Even though there is a chance that the items produced may not get sold they will still have direct overhead assigned to them. What this means is while they are sitting in inventory it will shift some of the overhead expenses to the following year. Wild, J., Saw, K., Chiappetta, B. (2009)
References
Sarbanes-Oxley Essential Information.(2006). Retrieved from https://www.sox-online.com/basics.html.
Retrieved on 01-09-12 by Donielle Davis.
Wild, J.J., Shaw, K.W., Chiappetta, B. (2009).Fundamental Accounting Principles. New York, NY:
McGraw-Hill.