Question
Sue Sparks is CFO of Gonzo Corp, a publicly-traded company. She has just seen the preliminary results for the quarter, and the quarterly earnings are
Sue Sparks is CFO of Gonzo Corp, a publicly-traded company. She has just seen the preliminary results for the quarter, and the quarterly earnings are considerably lower than street expectations (the consensus of equity analysts). Igor, director of accounting, suggests that the allowance for doubtful accounts (aka reserve for bad debts) could be re-reviewed with an eye towards reducing bad debt expense, thereby increasing earnings. Sparks knows the allowance has already been thoroughly analyzed, and reflects managements best estimate of uncollectible accounts receivable. Sparks ponders what to do next.
1. What is the ethical dilemma?
2. What are the potential impacts of the dilemma on Sparks, Igor, Gonzo Corp, and society?
3. What actions could Sparks take, and what would be the advantages and disadvantages of
her potential actions?
4. As CFO (and therefore a leader of the company), what are Sparks responsibilities from an
ethical perspective?
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