Part 2: Essay: Write A 2-Page Reflective Essay

Part 2: Essay: Write a 2 page reflective essay (not counting your title and references pages) in which you discuss your response to the following ethics case

Write a 2-page reflective essay discussing the ethical dilemma faced by an accountant who discovers a miscalculation that overstates financial projections. The essay should analyze the consequences of both disclosing and not disclosing the error, explore the ethical considerations involved, identify the relevant professional code of conduct principles, and outline step-by-step actions to address the situation in accordance with those principles. Incorporate appropriate ethics resources, cite at least one source from the provided materials, and follow APA format and citation style. The essay should include a title page, the main body, and a references page, and must adhere to proper academic writing standards with clear organization, logical flow, and thorough response to all questions.

Paper For Above instruction

The scenario presents a significant ethical dilemma for an accountant at Fernetti Conductor, Inc., involving the discovery of a miscalculation that causes the company's financial projections to appear more optimistic than they truly are. This situation requires careful consideration of ethical obligations, potential consequences, and appropriate actions in line with professional standards. The core issues revolve around whether to disclose the error, and the implications of either decision—either to reveal the misstatement to the president or to remain silent—are profound, impacting not only the company's integrity but also public trust and stakeholder interests.

Firstly, the consequences of informing the president about the miscalculations are substantial. Transparency would uphold the accountant’s ethical responsibility to honesty and integrity, aligning with the fundamental principles outlined in the American Institute of CPAs (AICPA) Code of Professional Conduct (AICPA, 2020). Disclosing the mistake could lead to short-term reputational harm for the company or the accountant, especially if the projections have already influenced investor decisions. However, transparency fosters long-term trustworthiness, minimizes risk of legal repercussions, and adheres to the ethical obligation to prevent deception. Conversely, failing to disclose the mistake can have severe consequences: it perpetuates misinformation, potentially manipulates stock prices unjustly, and breaches the accountant’s duty of trust. If discovered later, concealment could result in legal sanctions, disciplinary action, or damage to professional credibility (Kohlberg, 1981).

The ethical considerations under this scenario are rooted in the principles of honesty, integrity, objectivity, and responsibility. The accountant must evaluate the moral obligation to prevent deceptive practices versus loyalty to the employer and their interests. The president’s intent to use inflated projections to boost stock sales presents an ethical conflict, as it involves knowingly encouraging misleading disclosures. The accountant’s primary responsibility is to exemplify ethical behavior and uphold the profession’s standards, which emphasize truthful reporting. Ignoring the miscalculation violates these principles and compromises the accountant’s ethical integrity, which could have legal and professional ramifications (Weygandt, et al., 2015).

The relevant professional code of conduct in this scenario is from the American Institute of CPAs (AICPA). The principle of "Responsibility" explicitly states that members should "accept the overall ambit of their responsibilities" and "perform their professional responsibilities with the highest sense of integrity" (AICPA, 2020). This principle underpins the obligation to disclose accurate information and prohibits misleading financial statements. Its emphasis on integrity and ethical conduct guides the accountant to act transparently, even when it involves difficult circumstances.

Adhering to the AICPA’s Code of Conduct, the step-by-step actions would include: First, confirming the accuracy of the miscalculation to ensure it is genuine. Second, thoroughly assessing the potential impact of the error on stakeholders and the company’s reputation. Third, documenting the calculation process and findings meticulously. Fourth, privately consulting with a senior member of the accounting or ethics committee within the organization, if available, to seek guidance. Fifth, presenting a clear and honest account of the miscalculation to the president, emphasizing the importance of transparency for ethical and legal reasons. Sixth, advocating for corrective disclosures or amended projections if the projections have already been shared externally. Finally, ensuring that the company’s management and relevant stakeholders understand the importance of truthful reporting and ethical responsibility.

In conclusion, the professional and ethical course of action requires the accountant to prioritize transparency and integrity by disclosing the miscalculation. This upholds the core principles outlined in the AICPA Code of Conduct, reinforces their professional responsibility, and ultimately supports the ethical standards vital for maintaining public trust in financial reporting. While challenging, the decision to act honestly aligns with the long-term interests of the company, its stakeholders, and the accountant’s own professional integrity.

References

• American Institute of CPAs. (2020). Code of Professional Conduct. https://www.aicpa.org/research/standards/codeofconduct.html
• Kohlberg, L. (1981). The philosophy of moral development: Moral stages and the idea of justice. Harper & Row.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Accounting principles (12th ed.). Hoboken, NJ: John Wiley & Sons, Inc.