Lionheart, Inc., a public company, manufactures electric batteries used in golf carts and similar vehicles. In the

Question:

Lionheart, Inc., a public company, manufactures electric batteries used in golf carts and similar vehicles. In the third quarter of the fiscal year, the company lost a major contract to a competitor. Jane Jones, Lionheart’s chief executive officer, met with her senior managers and exhorted them to redouble their sales efforts so that the company would not show a loss for the year. Mark McCarthy, head of the golf division, responded by arranging for a company-paid Seychelles Islands vacation for the purchasing manager of a golf cart producer. The customer tripled its order for the fourth quarter, on the understanding that it would reduce orders by a like amount in future quarters. The result was that Lionheart reported a profit for the year, just as the CEO wished. The company’s share price soared when the profit figure came out. Soon thereafter, however, the company’s internal audit department pointed out that accounting regulations do not allow a company to book current profits for orders that relate to future purchases, and also raised questions about the Seychelles Islands vacation. The matter is referred to you as General Counsel of Lionheart. What will you suggest (or insist) the company do to respond to the problem?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: