At The End Of The Month Tomas Lott Prepared A Trial

At The End Of The Current Month Tomas Lott Prepared A Trial Balance F

At the end of the current month, Tomas Lott prepared a trial balance for AAA Rescue Service. The credit side of the trial balance exceeds the debit side by a significant amount. Tomas has decided to add the difference to the balance of the miscellaneous expense account in order to complete the preparation of the current month's financial statements by a 5:00 PM deadline. Tomas will look for the difference next week when he has more time. Do you feel that Tomas is acting in a professional manner?

Who is impacted by Tomas's decision to "plug" the numbers in order to get his statements to balance? If you were in Tomas's position, how would you have handled this situation? 75 word count

Paper For Above instruction

Tomas Lott’s decision to "plug" the trial balance by adjusting the miscellaneous expense account raises significant ethical and professional concerns. Such actions compromise the integrity of financial reporting, potentially misleading stakeholders, including management, investors, and auditors, about the company's financial health. It also breaches accounting standards that mandate accurate and honest financial statements. If I were in Tomas's position, I would prioritize identifying and correcting errors instead of adjusting figures artificially. Transparency and accuracy are essential in maintaining trust and adhering to ethical standards in accounting.

In practice, discrepancies in the trial balance should be thoroughly investigated. Common causes include data entry errors, misclassifications, or unrecorded transactions. Proper reconciliation procedures and internal controls are critical to prevent manipulation of financial data. When errors are identified, they should be promptly corrected, and if necessary, disclosures should be made to relevant stakeholders to ensure transparency. Compliance with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) should guide the process, emphasizing ethical conduct and accurate reporting.

Adjusting entries solely to balance the trial balance without understanding the underlying issue can jeopardize the credibility of financial statements and can potentially lead to legal repercussions. Ethical behavior in accounting demands thorough troubleshooting and honest reporting, rather than resorting to artificial fixes. The role of an accountant extends beyond mere number balancing to ensuring that financial statements reflect the true financial position of the company, fostering trust among all users of financial information.

Overall, while deadlines are crucial, sacrificing professionalism and ethical standards is not justifiable. It is better to communicate the discrepancy, seek additional time if necessary, and ensure that the financial statements accurately reflect the company’s financial position. Upholding integrity benefits not only individual professionals but also the credibility of the accounting profession and the broader financial system.

References

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