1. Janet Taylor is the new division controller of the snack-foods division of Gourmet Foods. Gourmet Foods has reported a minimum 15% growth in annual earnings for each of the past five years.The snack-foods division has reported annual earnings growth of more than 20% each year in this same period.During the current year, the economy went into a recession. The corporate controller estimates a 10% annual earnings growth rate for Gourmet Foods this year. One month before the December 31 fiscal year-end of the current year, Taylor estimates the snack-foods division will report an annual earnings growth of only 8%. Warren Ryan, the snack-foods division president is less than happy, but he says with a wry smile, "Let the end-of-year games begin."
   1. Deferring December's routine maintenance on packaging equipment by an independent contractor until January of next year.

Taylor makes some inquiries and is able to compile the following list of end-of-year games that were more or less accepted by the previous division controller:

1. Extending the close of the current fiscal year beyond December 31 so that some sales of next year are included in the current year.
2. Altering dates of shipping documents of next January's sales to record them as sales in December of the current year.
3. Deferring the current period's advertising by reducing the number of television spots run in December and running more than planned in January of next year.
4. Deferring the current period's reported advertising costs by having Gourmet Foods' outside advertising agency delay billing December advertisements until January of next year or having the agency alter invoices to conceal the December date.

1. The division controller is deeply troubled and reads the "Standards of Ethical Conduct for Management Accountants". Discuss each of the end-of-year games in light of the standards. Classify each of the end-of-year games as acceptable or unacceptable according to that document.
2. What should Taylor do if Ryan suggests that end-of-year games are played in every division of Gourmet Foods and that she would greatly harm the snack-foods division if she does not play along and paint the rosiest picture possible of the division's results?