Ethics Case

BYP4-6As the controller of Breathless Perfume Company, you discover a misstatement that overstated

net income in the prior years nancial statements. The misleading nancial statements appear in the

companys 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, Jerry McNabb, about this misstatement, you gather

your courage to inform him. Jerry says, Hey! What they dont know wont hurt them. But, just so we set

the record straight, well adjust this years nancial statements for last years misstatement. We can absorb

that misstatement better in this year than in last year anyway! Just dont make such a mistake again.

Instructions

(a) Who are the stakeholders in this situation?

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

(c)What would you do as a controller in this situation?Ethics Case BYP4-6 As the controller of Breathless Perfume Company, you discover a misstatement that overstated net income in the prior years nancial statements. The misleading nancial statements appear in the companys 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, Jerry McNabb, about this misstatement, you gather your courage to inform him. Jerry says, Hey! What they dont know wont hurt them. But, just so we set the record straight, well adjust this years nancial statements for last years misstatement. We can absorb that misstatement better in this year than in last year anyway! Just dont make such a mistake again. Instructions (a) Who are the stakeholders in this situation? (b) What are the ethical issues in this situation? (c) What would you do as a controller in this situation?