Johnson & Johnson faces a situation where management is under pressure to meet earnings targets. The following ethical issues are identified:
•Overstating inventory to reduce COGS
•Delaying expense recognition to inflate profits
•Misclassifying operating expenses as capital expenditures
Required:
1.Discuss the ethical implications of each issue.
2.Suggest measures to prevent unethical accounting practices.
3.Explain the role of corporate governance in maintaining ethical standards.