Legal & Ethical Financial Reporting

Legal & Ethical Issues of Financial Reporting
Rosa Papasodero
Eth376
phratry 24, 2012
Steven Uhl

Legal & Ethical Issues of Financial Reporting
Financial report requires a great deal of cargon, especially when dealing with the legalities and ethical motive of accounting. The Board of Accountancy has a set of standard rules that are considered as well as the Generally Accepted account statement Principles (GAAP) which are also a major player in the process. Accountants and CPAs know that any and all financial reporting moldiness be carefully and tediously gone over in rate to make sure that no legal or ethical issue has been overlooked. In the case of Excello Telecommunications, the CFO was flavor into ways to boost year-end earnings and thought he may have found a way to by chance do this by taking a $2.1 million motion and booking it in the current year ending (2010) and non in the following year (2011) when the transaction would actually be finalized.
Potential Legal Issues
According to the case study, Excello was not release to meet their earnings estimates for the year. This was overtaking to affect the companys bonuses, stock options and shareholders earnings (Mintz & Morris, 2011). The CFO, Terry Reed, found a transaction totaling $2.1 million that was going to be booked in January, 2011.



Mr. Reed decided that he needed to find a way to make that transaction recordable in December, 2010 in order to help boost the year-end figures. The problem, however, was that the product wasnt going to ship until January, 2011. According to GAAP, Excello must record this sale tally to the revenue recognition principle which basically means that revenue isnt recognized until it is earned. Even if the purchaser pays for the intersection in advance, the payment is recorded as a liability and not as revenue. Because of this, Excello cannot consider the $2.1 million as recordable revenue until the merchandise changes hands.
Because of this rule, Mr. Reed...If you want to get a full essay, order it on our website: Ordercustompaper.com



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