Question
Bob is the new controller of Sacramento Corp. The previous controller was promoted to Chief Financial Officer (CFO) and is now Bob's boss. He instructs
Bob is the new controller of Sacramento Corp. The previous controller was promoted to Chief Financial Officer (CFO) and is now Bob's boss. He instructs Bob that he should continue the practice of printing checks during the discount period, but then holding the checks for a few days before mailing them out. This allows Sacramento Corp. to take the purchase discount, but still keep the funds in their account to earn a few more days interest. Bob asks the CFO if the suppliers have complained about the practice and the CFO replies "the suppliers haven't taken away the discount so they can't be too upset about it." Is it ethical for Bob to continue this practice? Should he continue it? Explain your answer. What potential consequences are there to this practice? If Sacramento Corp. operated in a smaller town would that impact your decision?
Could you answer in detail please?
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