Columbia Industries is having a bad year. Net income is only $37,000. Also, two important overseas customers are falling behind in their payments to Columbia, and Columbia's accounts receivable are ballooning. The company desperately needs a loan. The Columbia Board of Directors is considering ways to put the best face on the company's financial statements. Columbia's bank closely examines cash flow from operations. Daniel Peavey, Columbia's controller, suggests reclassifying the receivables from the slow paying customers as long- term. He explains to the board that removing the $80,000 rise in accounts receivable from current assets will increase net cash provided by operations. This approach may help Columbia to get the loan. Requirements: 1. Identify the ethical issue(s) in this situation. 2. Who are the stakeholders in this situation? 3. What is the potential impact (economic, legal and ethical) of this reporting issue on each stakeholder? 4. What should the Board do? 5. Under what conditions would the reclassification of the receivables be considered ethical