Daryl Kirby opened Squid Realty Co. on January 1, 20x3. At the end of the first year, the business needed additional capital. On behalf of Squid Realty Co., Daryl applied to Ocean National Bank for a loan of $375,000. Based on Squid Realty Co.s financial statements, which had been prepared on a cash basis, the Ocean National Bank loan officer rejected the loan as too risky.

After receiving the rejection notice, Daryl instructed his accountant to prepare the financial statements on an accrual basis. These statements included $65,000 in accounts receivable and $25,000 in accounts payable. Daryl then instructed his accountant to record an additional $30,000 of accounts receivable for commissions on the property for which a contract had been signed on December 28, 20x3. The title to the property is to transfer on January 5, 20x4, when an attorney formally records the transfer of the property to the buyer.

Daryl then applied for a $375,000 loan from Free Spirit Bank, using the revised financial statements. On this application, Daryl indicated that he had not previously been rejected for credit.

Describe the various ethical and professional issues involved in this case.

Ethical or Unethical?

Describe whether you believe each of the parties you listed above acted ethically or unethically in relation to all of the ethical issues you listed. Support your position with a rational moral and/or professional argument.