Professional and Ethical Behaviour}

You are so excited to start your new job at Leaf Inc., especially after the long process of on-campus recruiting. You thought you would never get a job. Your goal is to learn as much as possible and make a real contribution to your organization, and at the same time work on getting your professional accounting designation within the next two years. You are assigned to the accounts receivable department. You aren't exactly thrilled about that, as normally nothing exciting happens in the accounts receivable department.

Six months into your job, you are assisting your boss, Jessica, with getting ready for the upcoming external audit of the organization. She mentions that normally these audits are routine. "As long as we tell the auditors what they want to hear, this should go quickly," she says.

You're not sure what to make of your boss's comments, but you think to yourself that you are here to learn and that is what you will do.

Jessica asks you to identify and provide her with a list of all accounts receivable customers that have outstanding balances of greater than 120 days. She mentions, "The auditors will be paying close attention to these balances, as they always do, so we need to make sure our story makes sense. We don't want the auditors to think these are not going to be collected."
You recall from your financial accounting course in university that any accounts receivable balances that are deemed to be uncollectible should be provided for in the financial statements. You can't understand why Jessica wants a story about the balances being collectible, as it appears they most likely are not.
You remember that your goal is to learn as much as possible, so you ask your boss, "What is the reason behind what we are doing here? I learned in my accounting course that we should be providing for these as uncollectible." Jessica is shocked that you are asking her such a question, but feels that she needs to explain now that you have asked. She says Don, the CEO of the company, hates seeing write-offs of any sort in the financial statements, especially when they relate to customers and a potential uncollectible accounts receivable. "He tells us to make up a story to the auditors that they will buy and never provide for or write off any accounts," Jessica says. "We do what the boss tells us, it's that simple. We want to keep him happy. Plus, if we don't have to provide for any accounts, the net income on the statement of earnings will look better and I get a larger bonus, so it really is win-win for me."
You continue on with your work for the day, but cannot focus given what your boss just told you. Required:
Identify and discuss any ethical issues. Discuss any other issues that are important.