For the last five years, you have been a corporate accountant for Fearless Company, a public company that has seen explosive growth through acquisitions of smaller competitors in its industry, retail pharmacy Farrlesss CFO tells you that Farrlesss per store revenue for the fiscal quarter, as yet not publicly disclosed, has dropped by 15 percent As a result, Fearless has had insufficient cash flow to pay some suppliers, many of whom are refusing to ship additional inventory to Farrless until it pays its outstanding debt to them The CFO tells you he believes that the revenue drop, while temporary, will continue for the rest of the fiscal year Next year, he says, per store revenue will be 20 percent more than last years historic high Consequently, to avoid a temporary drop in the market price of Farrell's stock, which will reduce the value of the CFOs stock options and make it more expensive for Fearless to raise capital, the CFO wants you to create false accounting entries that will smooth Farrlesss revenues You should define the ethical dilemma and state why it is a dilemma What are the facts What is the ethical dilemma and is there more than one What is the origin of this dilemma What caused the dilemma (not necessarily the problem that led to the dilemma) What are the critical issues Lay out the facts and tell how they relate to the problem Who are the stakeholders What position will each stakeholder take This is not just you as auditor Know the stakeholder theory What are the alternatives Do you have alternatives What are they Cheat or not cheat What is our social responsibility regarding this dilemma Look at the theories under social responsibility in the chapter What are the relevant laws and policies Look at the ethical theories in the chapter and decide which you would use to help you make a decision Look at my lecture notes for ways to make a decision and review it for short term and long term analysis What are the ethical implications of each alternative Is it legal How would it look in the light of day If it becomes public knowledge What are the consequences Does it violate important values Does it violate the Golden Rule Is it just Has the process been fair Is more than one alternative right Which values are in conflict Which of these values are most important Can you find an alternative that is consistent with your values 10 What is the ethical dilemma described in the scenario Why is it an ethical dilemma 11 Do any laws or policies apply to this situation Do NOT forget Sarbanes Oxley or WHISTLEBLOWER theories Know how to report unethical behavior and requests 12 Who else at Farrless should be involved in resolving the problem Explain

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For the last five years, you have been a corporate accountant for Fearless Company, a public company that has seen explosive growth through acquisitions of

For the last five years, you have been a corporate accountant for Fearless Company, a public company that has seen explosive growth through acquisitions of smaller competitors in its industry, retail pharmacy. Farrlesss CFO tells you that Farrlesss per store revenue for the fiscal quarter, as yet not publicly disclosed, has dropped by 15 percent. As a result, Fearless has had insufficient cash flow to pay some suppliers, many of whom are refusing to ship additional inventory to Farrless until it pays its outstanding debt to them. The CFO tells you he believes that the revenue drop, while temporary, will continue for the rest of the fiscal year. Next year, he says, per store revenue will be 20 percent more than last years historic high. Consequently, to avoid a temporary drop in the market price of Farrell's stock, which will reduce the value of the CFOs stock options and make it more expensive for Fearless to raise capital, the CFO wants you to create false accounting entries that will smooth Farrlesss revenues.

You should define the ethical dilemma and state why it is a dilemma.

What are the facts? What is the ethical dilemma and is there more than one? What is the origin of this dilemma? What caused the dilemma (not necessarily the problem that led to the dilemma)

What are the critical issues? Lay out the facts and tell how they relate to the problem.

Who are the stakeholders? What position will each stakeholder take? This is not just you as auditor. Know the stakeholder theory.

What are the alternatives? Do you have alternatives? What are they? Cheat or not cheat.

What is our social responsibility regarding this dilemma? Look at the theories under social responsibility in the chapter.

What are the relevant laws and policies?

Look at the ethical theories in the chapter and decide which you would use to help you make a decision. Look at my lecture notes for ways to make a decision and review it for short term and long term analysis.

What are the ethical implications of each alternative?

Is it legal?

How would it look in the light of day? If it becomes public knowledge

What are the consequences?

Does it violate important values?

Does it violate the Golden Rule?

Is it just?

Has the process been fair?

Is more than one alternative right?
- Which values are in conflict?
- Which of these values are most important?
- Can you find an alternative that is consistent with your values?

10. What is the ethical dilemma described in the scenario? Why is it an ethical dilemma?

11. Do any laws or policies apply to this situation? Do NOT forget Sarbanes/Oxley or WHISTLEBLOWER theories. Know how to report unethical behavior and requests.

12. Who else at Farrless should be involved in resolving the problem? Explain.