As the controller of TellTale Ice Cream Company, you discover a misstatement that significantly overstated net income in the prior year’s financial statements. The misleading financial statements appear in the company’s annual report which was issued to banks and other creditors less than a month ago. After much thought about the consequences of telling the president, Eddie Lieman, about this misstatement, you gather your courage to inform him. Eddie says, “Hey! What they don’t know won’t hurt them. But, just so we set the record straight, we’ll adjust this year’s financial statements for last year’s misstatement. We can absorb that misstatement better in this year than in last year anyway! Just don’t make such a mistake again.” LO8 Instructions

(a) Who are the stakeholders in this situation?

(b) What are the ethical issues in this situation?

(c) What would you do as the controller in this situation?