What is the accounting problem that the Linbarger Company faces?
From the discussion of the case given, the major accounting problem the company faces is the problem of cash management. The company is facing some differences between actual balances and expected cash balances causing liquidity. Liquidity is when the cash held by the company is less than the one demanded by the firms ( Duska et. Al, 2018) . The company might have maintained good coordination and planning between payments and the receipts. Funding ways of short-term cash ought to be planned in advance or earlier to honor the agreement. Without that then no need to put terms and condition in the agreement.
2. What are the ethical considerations in this case? Provide rationale for why these are ethical considerations.
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The ethical considerations evident in the case is true information providence. In reference to the accounting concept, there ought to be closing the books of accounts uniformity. Accountants are expected and required to provide true information in the financial statement without adding any information in favor of the firm. In this case the accountant may have no choice but to provide wrong information to the insurance company for him to remain safe. Receipts of July 4rth cannot be put in balancing of end of June. This causes errors to cumulate in the process of compensating earlier errors (Pergola & Walters, 2017 ) . Willful errors in accounting are called frauds.
3. What are the negative impacts that can happen if you do not follow Lisa Infante’s instructions to wait one more day to post the balance?
Negative impacts are evident in the case itself. If the accountant fails to follow on Lisa’s instructions on waiting for one more day to post the balance, the firm will be forced to present or provide a lesser balance than that amount indicated in the firm and the insurance firm agreement. This will default the agreement and the organization’s employees may end up losing their jobs (Brands & Lange, 2016).
When Lisa takes the actions stated in the agreement, then the firm is absolutely under danger. The impact may be very dangerous but the further fund needed being a sum of 120000 only can have alternatively be managed with short term load and also esteemed customers can be encouraged to make early payment and take a discount.
4. Who will be negatively impacted if you do comply? Provide a rationale for why these individuals will be impacted.
Stakeholders who are connected or linked either directly or indirectly with the company will be impacted negatively ( Mintz , 2016) . Stake holders of the insurance company were also negatively impacted because of the unethical practices involved. If incase the organization chooses to comply with the agreement, then the chief accountant of that organization will be in big problem.
5. What is one alternative that you could pursue in this scenario? Support your recommendations with information you learned in this class.
The accountant will have to explain the reason why the cash balances do not meet the agreement’s requirements. The rational is quite simple, regardless of the magnitude of that amount that is considered. A fraud is a fraud irrespective of the amount involved. That’s where accounting pops in, the purpose of accounting is seen in practices of fraud.
In conclusion, the alternative solution that can be pursued or adopted by the organization in order to remain safe is to reach only one of the organizations distributors and ask them to try a good check that can increase the cash from $80,000 to any good value above $20,000. This will ensure the organization meets all the requirements of the agreement between the organization and the insurance company. . Accountants are supposed to deal with every financial details of employees and the organization as well. The ethical codes are there to guide the accounting professionals in choosing on how to abide by the codes so that they protect their profession, gain the trust of the public, and make a demonstration of honesty and fairness.
References
Brands, K., & Lange, L. S. (2016). Teaching Accounting Ethics: Opportunities and Challenges. Journal: Vol , 5 (1), 6.
Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting ethics . Wiley-Blackwell.
Mintz, S. (2016). Giving voice to values: A new approach to accounting ethics education. Global Perspectives on Accounting Education , 13 (1), 37-50.
Pergola, T. M., & Walters, L. M. (2017). Ethics in the Accounting Curriculum.
