Conflict Interest Case

Subject: Chief employee bonus: Conflict Interest. To: Ethics for Accountant From: Kyungwon Kwak involvement: 03/07/2011 1. Ethics Case-Chief employee bonus The WGN Company has a bonus arrangement, which grants the financial fault president and other executives a $15,000 bonus if the net income exceeds the front years by $1,000,000. Noting that the current financial statements report an gain of $950,000 in the net income, Vice President Jack Brickhouse asks Louise Boudreau, the controller, to contract the compute of stock-purchase warrant expense to $60,000. The present estimate of sanction expense is $500,000 and is known by both Brickhouse and Boudreau to be a fairly soft amount. practical raising questions: | ·  | Should Boudreau lower her estimate? | | ·  | What ethical issue is at stake? Would anyone be harmed by the change in estimate? | | ·  | Is Brickhouse playacting ethically? | | | | My Possible answers:| | * | * No, Louise Boudreau, the controller should not manipulate net income in suck of any compensation plan the company may have.

| |  | * The sparing resides of the management and the potential for their bonus plans conflict with the stockholders interest that financial statements clearly and accurately reflect net income. If the warranty expense is reduced and the original estimate turns out to be accurate, the stockholders are harmed because the company pays a bonus the managers did not earn. | | ·  | * No, Brickhouse is acting unethically. His action serves only his self-interest and has no clear stern in proper accounting procedures. 1. Ways to mitigate conflicts of interestsRemovalThe surpass way to handle conflicts of interests is to avoid them entirely. For example, someone elected to semipolitical office might sell all corporate stocks that he/she owns before taking office, and resign from all corporate boards. Or that person could move his/her corporate stocks to a special trust, which... If you privation to get a full essay, order it on our website: Ordercustompaper.com

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