Imagine you are the auditor at Acme Company (a large publicly traded company based in the United
Question:
Imagine you are the auditor at Acme Company (a large publicly traded company based in the United States), which intends to acquire another company for a price of 8.5 billion dollars, or 7.8 percent of Acme’s total assets.
The SEC has created materiality standard rule-of-thumb guidance (not a mandate or law) for mergers and acquisitions regarding reportable events. It states that mergers or acquisitions that exceed 5 percent of the acquiring company’s total asset should be registered with the SEC. So, technically, this acquisition is considered material and does not legally need to be registered. The question is, should it be?
From an ethical standpoint, would you advise registering this acquisition?
Explain your approach to answering the question of whether to file using sound reasoning that includes all critical areas that will inform the decision. Consider the following:
The criteria upon which you base your decision.
Ethical and professional reference points that guide you.
Possible ramifications for shareholders or other potentially interested parties.
Ethics in Accounting A Decision Making Approach
ISBN: 978-1118928332
1st edition
Authors: Gordon Klein