You are the controller for ABC company, a small, publicly-traded manufacturing company, and you report directly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are the controller for ABC company, a small, publicly-traded manufacturing company, and you report directly to the CFO. In order to protect itself against foreign currency fluctuations, ABC has entered into a hedging transaction by purchasing derivatives. Now that your company has derivative activities and hedging transactions, you are required to apply FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." Since you are not familiar with this standard, you indicate to your boss that you would like to hire an outside accounting firm to help you implement the standard, and he agrees to this arrangement. In the course of its work, the CPA firm asks you questions about how you wish to apply certain aspects of hedge accounting. You didn't realize you had a choice. Your boss indicates that CPA firm should make the decision regarding application, since your company is paying them such expensive fees. You grow to appreciate the work that the CPA firm is doing for your company. You indicate to your boss that you think that the CPA firm should take over the audit work for the company. Your boss agrees. Instructions: What are the ethical issues in this case? (Hint: There are three). What rules apply? Apply the rules to reach a conclusion about the course of action that should be taken with regards to each issue. You are the controller for ABC company, a small, publicly-traded manufacturing company, and you report directly to the CFO. In order to protect itself against foreign currency fluctuations, ABC has entered into a hedging transaction by purchasing derivatives. Now that your company has derivative activities and hedging transactions, you are required to apply FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." Since you are not familiar with this standard, you indicate to your boss that you would like to hire an outside accounting firm to help you implement the standard, and he agrees to this arrangement. In the course of its work, the CPA firm asks you questions about how you wish to apply certain aspects of hedge accounting. You didn't realize you had a choice. Your boss indicates that CPA firm should make the decision regarding application, since your company is paying them such expensive fees. You grow to appreciate the work that the CPA firm is doing for your company. You indicate to your boss that you think that the CPA firm should take over the audit work for the company. Your boss agrees. Instructions: What are the ethical issues in this case? (Hint: There are three). What rules apply? Apply the rules to reach a conclusion about the course of action that should be taken with regards to each issue.
Expert Answer:
Answer rating: 100% (QA)
The ethical issues in this case is that of independence and objectivity Since CPA is doing accountin... View the full answer
Related Book For
Financial Accounting Information For Decisions
ISBN: 978-0324672701
6th Edition
Authors: Robert w Ingram, Thomas L Albright
Posted Date:
Students also viewed these general management questions
-
You are the manager of a business that is losing money due to COVID and the CEO is pushing you hard to fix things. You have many employees who are also effected by COVID. Your financial statements...
-
You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph...
-
You are the manager of a monopoly. A typical consumers inverse demand function for your firms product is P = 100 20Q, and your cost function is C(Q) = 20Q. a. Determine the optimal two-part pricing...
-
What is the result of executing the following method? A. The declaration of name does not compile. B. The declaration of _number does not compile. C. The declaration of profit$$$ does not compile. D....
-
A proposal is made to use a geothermal supply of hot water to operate a steam turbine, as shown in Fig. P6.105. The high-pressure water at 1.5 MPa, 180C, is throttled into a flash evaporator chamber,...
-
Explain the difference between weathering and erosion.
-
1. Your instructor will divide the class into teams and assign each team the task of investigating the start-up of one of the following businesses: a. Submarine sandwich shop b. Day care service c....
-
Horizon Press produces textbooks for college courses. The company recently hired a new editor, Billie White, to handle production and sales of books for an introduction to accounting course. Billies...
-
Show that the mean square estimate is the mean of the posterior den- sity. Show this by differentiating eq. (13) at the lecture slides with respect to and set the obtained gradient to zero. Now the...
-
Assuming Jay and JoAnn have this same business that they run as a partnership, prepare their joint Federal income tax return for 2022. Attached is the copy of the partnership K-1 for each of them....
-
Starting with a compound with 6 (or less carbons) propose a synthesis for the assigned compounds. Provide all reagents and show intermediates (3 points) CI. Br NO2
-
Arshadi Corp.'s sales last year were $65,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)?
-
Please use the textbook "THE LEADER'S COMPANION Insights on Leadership Through the Ages by Thomas Wren"? The Leader's Companion" collectively bring together leaders and theorists in the study and...
-
How do postcolonial authors utilize allusions to colonial histories and indigenous traditions as a means of reclaiming and reinterpreting cultural narratives, subverting colonial perspectives, and...
-
C. When user clicks Distance Converter, an input dialog will pop up where user can type value and click OK: Welcome to Converter Input X X ? Input miles distance to convert 3.1 OK Cancel Exit...
-
Bridgeport Inc. loans money to John Kruk Corporation in the amount of $880,000. Bridgeport accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest...
-
detail a calculation for finding the most broad unifier of two terms. Delineate your response by bringing together the accompanying sets of terms: f(x, a, x) with f(a, y, b) f(x, y, z) with f(g(y),...
-
Which of the following gives the range of y = 4 - 2 -x ? (A) (- , ) (B) (- , 4) (C) [- 4, ) (D) (- , 4] (E) All reals
-
Information is provided below for two companies that produce similar jewelry items for the same market. Compute the asset turnover, profit margin, and return on assets for each company for each of...
-
For each of the following independent situations, determine: (a) Whether the bonds sold at face (maturity) value, at a premium (more than face value), or at a discount (less than face value), and (b)...
-
Assume you have inherited a sum of money from a distant relative and are looking for good investment opportunities. You are considering investing in one of two companies, Wonderworks or Hoffstetters....
-
Suppose that expectations about the U.S. equity market and the T-bill rate are the same as they were in 2018, but you find that a greater proportion is invested in T-bills today than in 2018. What...
-
Your client chooses to invest 70% of a portfolio in your fund and 30% in an essentially risk-free money market fund. What are the expected value and standard deviation of the rate of return on his...
-
Your clients degree of risk aversion is A = 3.5. a. What proportion, y, of the total investment should be invested in your fund? b. What are the expected value and standard deviation of the rate of...
Study smarter with the SolutionInn App