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By Dave Burt, CPA - Recently, we received several questions from readers who wrote in about ethical issues (See: Co-Worker Ethics, 10/12/07; Employee Perks, 10/26/07). One reader had a problem with a co-worker’s reported mis-behavior and one was generally disturbed with what he saw in the news. Their plea: what do they do? I also have a story. Once as a division controller, I fell out of grace with corporate because of large increases I proposed making to our division’s reserves for bad debt and inventory obsolescent. There was no mistaking it. One day I was lauded by the corporate controller for being a go-getter and the next I was called on the carpet by our general manager for some vague ineptitude. The only incident between these events was my proposed entries, which, in the end, I made. While I no longer work there, I still have my integrity. Something one should never leave at a prior employer.
Do you agree with me? Where did I go wrong? Have you a similar experience?
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Cost Accounting - Formulae in Standard Costing.
DATE: 23.12.2007
Respected Sir
I am a student currently preparing for Professional Competency Examinations of ICAI ,Newdeli. I am currently undergoing theArticleship Training with B.RAJ & Co , Chartered Accountants , Coimbatore , India.
Kindly provide me the various Formulae in Standard Costing for my easy reference.
With regards
E.N.AnanthanarayananStudentCoimbatore , India
Gumption
Dear Linda,
Good work. Sounds like you approached it professionally using several authorities and a little gumption.
David Burt, CPA, So. Cal.
An example
For example, we had a revenue recognition issue. Management felt that we should recognize the revenue over time. In evaluating the four criteria for revenue recognition, I simply could not support this position. I wrote up the transaction to support recognizing the revenue up front and supported my conclusion with quotes from SEC and FASB literature. Even though I did not give them the answer they were looking for, since I was able to support my conclusion; management accepted my conclusions.
Linda Cavanaugh, OH
Example?
Dear Linda,
I’m not sure I understand what you mean by right answer and wrong answer? Can you give me an example?
Dave Burt, CPA, So. Cal.
Are we really up right thinking animals?
Dear Harold,IASB chair, Sir David Tweedie recently said, “Where I take issue with universities is in their teaching of accounting standards. They do that to help their students with their professional training. [But] I think that the universities should be teaching them to think…As we start pressing on judgment we’re going to bring the professionalism back.” July 2007, Journal of Accountancy. I’m all with you, personal integrity; competence and ethics are all necessary for a right mind. ICE would come easier for students if they were taught how to think for themselves a little more as does Sir Tweedie. But not just about their careers but about other important stuff. From high school I went straight into the Vietnam jungles. I was 19 years old and knew next to nothing about the world. And the most I learned in the service was how to deal with fear. College didn’t smarten me up. It was just about learning how to take tests or write papers. It finally took experience and life’s little bruises to get it done Harold, do you think that those accountants that prepared those Enron entries were maybe thinking a little too much about their careers or maybe mindlessly following some established journal entry approval process? Dave
We don't make up the numbers, we just report them
I am always amazed when the higher ups get upset over the numbers we give them. I like to tell them that the numbers don't lie and we just report them. As a research accountant I am often asked to figure out the accounting treatment for a transaction and often the "right answer" is suggested. I try to support the "right answer" but if the literature doesn't back up the "right answer", I give them the "wrong answer". The management at my company is very supportive of this approach even if they don't like the answer. Just make sure you have all your ducks in a row and have researched every possibility before telling management what they don't want to hear.
Linda C., CPA, Ohio
Integrity, competence and ethics is everthing
These are the Big 3 for me or I wouldn't still be working in accounting. You have to be able to look at yourself in the mirror and not flinch. And your boss has to be able to trust you to do what's right. If you find yourself in a position where you're being asked to ignore any one of the three, you're in the wrong job.
I know in this day of "situational ethics" that's considered to be an old fashioned attitude but there are still many people who appreciate it.
I quit one job where these were in question and haven't looked back. That door was closed but a dozen others opened.
You made the right decision.