Please help with these two assignments Thanks ATC 45 Ethical

Please help with these two assignments. Thanks!

ATC 4-5 Ethical Dilemma I need just a little extra money John Riley, a certified public accountant, has worked for the past eight years as a payroll clerk for Southeast Industries, a small furniture manufacturing firm in the Northeast. John recently experienced unfortunate circumstances. His teenage son required major surgery and the medical bills not covered by John\'s insurance have financially strained John\'s family. John works hard and is a model employee. Although he received regular performance raises dur- ing his first few years with Southeast, John\'s wages have not increased in three years. John asked his supervisor, Bill Jameson, for a raise. Bill agreed that John deserved a raise, but told him he could not currently approve one because of sluggish sales. A disappointed John returned to his duties while the financial pressures in his life continued. Two weeks later, Larry Tyler, an assembly worker at Southwest, quit over a dispute with management. John

Solution

a. Yes, johns act did affect balance sheet payroll expenses are deductible expenses from revenues and had he not approved the payroll expense, there would have been higher net profit and higher retained earnings portion in the balance sheet. Further, since he paid the excess cash, the cash balance in the balance sheet is also affected.

b. John violated Article 1(which states that a member should carry out their responsibility with sensitive professional and moral judgment. There is also a violation of Article 3 which covers integrity.

c. The three elements of fraud triangles are:

- Presence of some kind of pressure: Sons\'s injury

- Availablity of an opportunity: Weak controls at company

- Capacity for rationalization: John felt he was entitled to pay raise but since he didn\'t he find the act morally justifiable

Second Assignment:

a. Since bad debts expenses are not recognized timely, retained earnings got inflated and consequently stockholders equity. Moreover, accounts receivable are recorded at value greater than realizible

b. Article 1 and Article 3 would be in violation

c. The presence of three elements can be understood as follows:

- Presence of opportunity: Since the facts of the impairment of the accounts receivables were not known publicly, Sunders had an opportunity to commit a crime.

- Pressure: He needs urgent cashflows at a faster rate for his business.

- Rationalization: Since the business is thriving, Saunders believe there would be no issues in repaying the loan once he can get the cash for expansion.