Jackson and Ella Hughes own a successful chain bookstore specializing in children’s books called Pages, Inc. Pages’ stock trades on the public stock exchange. Each quarter, their accountant Felicity Agnes prepares financial statements. This year, Jackson and Ella’s four-year-old son Alex is starting school at a local private school whose $5,000 tuition deposit is due in May. Ella requests that Felicity write a check to the school from Pages’ checking account, reasoning that the business needs him to have an education so he can take over as CEO down the road. She tells Felicity to record this as an education expense. Felicity hesitates to record the expense because Alex is not a current employee of Pages, but she fears losing her job if she does not comply. Answer the following questions related to the case: What are the ethical issues? Who are the stakeholders? (at least 3) What are Felicity’s alternatives? (at least 3) What would you do if you were Felicity?
Answered Essay: Jackson and Ella Hughes own a successful chain bookstore specializing in children’s books called Pag
Expert Answer
Ans: 1. ethical issue involved here is wrong recording of expenditure in the books of accounts and thus resulting is presenting wrong financial statements and window dressing of financial statements.
Ans 2: Stakeholder involved here is :
1. Share holders of the organisation
2. Revenue authorities.
3. Employees (i.e. Felicity)
Ans 3: Felicity’s alternatives are:
1. Record the amount paid as drawings and disallow the expenditure in presenting books to revenue authorities
2. Disclose the management about the transaction and let them determine the necessary course of action.
3. Record the transaction as wanted by the Ella’s.
Ans 4: I wouldn’t have the recorded the transaction as it is against the ethical principles to present wrong books of accounts.
