1. You are the Controller of a medium-sized oil exploration company in Texas. It is time to make a forecast of the companys annual earnings. You know that some additional losses will be recognized before the company prepares its financial statements.

The President of the company has asked you to ignore the additional losses. He argues that the losses have not occurred and the information that you are providing is an estimate, so precision is not required. The President knows that if the forecasted numbers are lower-than-expected, the company will not be able to obtain a loan from the bank, the loan is desperately needed. The loan will fund before the actual earnings are realized.

REQUIRED:

Discuss the ethical implications and demonstrate your decision-making processes for the above scenario. Below are questions that may help guide your discussion. The questions are a guide (a sentence or two answering each question is insufficient). You should provide a well-organized thoughtful discussion of the ethical situation.

What dilemma does the controller face? What problem(s) does the company have?

Who are the potential stakeholders and how might they be affected by the decision of the controller?

What choices does the controller have? Evaluate the choices, i.e. who benefits or who is hurt by the choice(s).

What action would you recommend, i.e. how do you believe the problem should be resolved?

Going forward, what should the company do regarding organizational ethics?