Please answer the following 3 questions based on the case below. Answers should be brief and well written. Question 1 should be a simple list of 3 procedures. Questions 2 and 3 should be one paragraph each. Document should one be 1 double spaced page.

Case

Olivia, Simple Company's Controller, is concerned that net income may be lower this year. In addition, for the past five years revenue has been declining and expenses have been stable, indicating a possible trend.The Company is in negotiations regarding a much needed, sizable bank loan.Simple Company is a closely held, wholesale company with 10 stockholders. Simple Company purchases exercise equipment from oversea suppliers and then resale to domestic companies.Mr. Bigshot, the CEO, holds 60% of the Company's stock. The Company has approximately 400 employees, which includes eight in the accounting department.

Olivia is convinced that expenses cannot be reduced again and the Company continue to maintain financial viability.She is concerned that, without the bank loan, upper-level management might resort to laying off personnel, including accounting staff.Olivia knows that there are accounting measures that would improve its financial ratios and make the company appear more profitable.These accounting measures are completely allowed under GAAP.In the past, applying proper GAAP procedures, the company focused on keeping its taxable income at a minimum.Given recent events, as described, Olivia believes that the Company could use proper GAAP procedures that emphasizes income and subsequently increase the chance of obtaining the bank loan.

Olivia believes this approach could save jobs, including hers.

Questions

1.List 3 GAAP procedures that Simple could use or switch to, in order to make the Company look more profitable.The procedures should be listed in order of magnitude, ie. Begin with the one that normally would generate the greatest result in a wholesale company.(3 points)

2.What ethical dilemma, if any, does Olivia face? (3 points)

3.Given your answer to requirement 2, what would you do and why? (3 points)

The following may be helpful in answering the questions and should only be used as guidelines. Analyze the Situation (Do not answer each of the following in your submission.The following are guidelines, etc., to help you answer the requirements)

1. Recognize an ethical situation or ethical dilemma. The first step is to know when you have a problem.
2. Move toward an ethical resolution by identifying and analyzing the principal elements in the situation. Seek answers to the following questions.
3. a. What parties may be harmed or benefited?
4. b. Whose rights or claims may be violated?
5. c. Which specific interests are in conflict?
6. d. What are my responsibilities and obligations?

These questions should help you identify and sort out the facts.

1. Identify the alternatives and weigh the impact of each alternative on various parties.
2. Select the best or most ethical alternatives, considering all the circumstances and the consequences.Develop your reason, do not rationalize, for making your decision.
3. Adhering to technical or professional regulations or pronouncements is not synonymous with making ethical decisions.This process of ethical sensitivity and selection among alternatives can be complicated by pressures that may take the form of time pressures, job pressures, client pressures, personal pressures, and peer pressures.

"The study of ethics does not tell you what to do but instead presents a framework that can be used to study the ethical dimensions of various issues. An approach that is commonly applied in the area of business decision making is referred to as stakeholder analysis. In stakeholder analysis, a business decision maker is asked to consider a broad set of constituencies in making business decisions. Instead of focusing only on shareholders and maximizing shareholder wealth, management is encouraged to consider both the moral and social implications of their decisions in terms of how the decisions affect all stakeholders of the company. This broader set of stakeholders includes shareholders as well as employees, suppliers, customers, the local community, and any other party that might be affected by the decision."