Farm Equipment Farm Equipment Ltd. (FE), based in St. Albert, Alberta, is a small manufacturer of specialized grain and seeding equipment. The shares of FE are publicly traded on a stock exchange. FE has a 5-member board of directors. The vice president (VP) of marketing and the chief executive officer (CEO) sit on the board as well as 3 friends of the CEO. All the board members hold shares in FE. Bonus plan for executives is attached to the gross profit levels. Executives have to travel a lot because of the nature of their business. FE markets all its products through a network of approved distributors. The distributors' sales are to the farm industry in western Canada, and, consequently, are highly correlated to the profitability of that industry. During the past several years, bad weather, lower farm product prices, and rising farming costs have resulted in declining sales volume for all farm equipment manufacturers, including FE. In the summer of 2018, anticipating a further substantial decline in sales for the fiscal year ending December 31, 2018, FE's vice president of marketing developed a special marketing promotion to increase sales to its distributors during the fourth quarter of 2018. The VP of marketing has convinced the CEO to offer FE's distributors a special promotion under which FE would guarantee to buy back, at full price plus return freight charges, any unsold inventory at the end of July 2019. Although FE has always offered its dealers some buy-back terms, in this case the terms of the promotion were much more generous. In addition, FE offered to extend the distributors' trade credit terms from 30 days to 180 days. The CEO instructed the chief finance officer (CFO), a professional accountant, that all revenue generated by the promotion was to be recognized in the current quarter and that no estimate for returns was to be accrued, since this was the first year of the promotion. Although she had some objections, the CFO followed the CEO's instructions in fear of losing her job. In the publicly disclosed financial statements for the current quarter, the CEO and CFO had certified that the financial statements fairly represented the 2018 financial condition of the company. The promotion resulted in a significant increase in fourth-quarter sales and FE ended fiscal 2018 with gross sales of $58,000,000, an increase of approximately 3% compared to fiscal 2017. The VP of marketing estimated that without the program, sales would have been as much as 18% below fiscal 2017. The sales promotion was deemed a huge success and was to continue for the next year. The financial statements presented in FE's 2018 annual report did not disclose any of the details of the special promotion nor were the auditors informed of this promotion. The board of directors was extremely pleased with the results and approved the audited annual report without question. Upon release of the annual report to the public, FE's share price increased by 10%. In August 2019, the CFO prepared a special report to the CEO that summarized the overall results of the special promotion. According to the CFO's analysis, by the end of July 2019, FE had refunded approximately 47% of the sales related to the promotion. In addition, the report indicated that the age of accounts receivable from its distributors had increased by an average of 48 days to the end of July 2019. Every five years FE evaluates its strategic directions. CEO wants CFO to conduct a risk assessment or SWOT analysis that can be used in decision making.

Required:

Please help me use a bullet point format to summarise the case issues shortly.