1 paragraph respond to 2 Colleagues

Respond to 2 colleagues 1 paragraph each. Use APA citations and References

Assignment and Instructions attached. I have attached my assignment from last week for you to look back on.

Respond

 

to two or more of your colleagues in one or more of the following ways:

· Comment on the scenarios and remedies presented by your colleague, providing your insights based on your experience or knowledge.

· Suggest additional steps that managers might take to ensure accurate data and provide examples of when such steps have been taken, including the resulting outcomes.

· Ask a probing question of your colleague, based on your readings from the week and/or your experience. You should be sure to include the context for your question and why it is important to address.

· Compare your colleague’s situation with the one you presented and share any insights you gained.

Develop your responses based on your own experience, the resources for the week, and additional research.

1st Colleague to respond to:

Impact of poor accounting practices in business operations.

According to Zimmerman (2017), when companies fail to adhere to the established rules of generally accepted accounting principles (GAAP), they run the risk of promoting unethical behaviours and making poor business decisions based on inaccurate information (p. 3).

During my time as Operations Manager at a manufacturing company, the company came under severe pressure from the board and shareholders for encountering two successive years of failing to achieve the target profit levels. In response, the Chief Accountant in conjunction with the GM devised and executed a complex scheme to turn the company fortunes which eventually lead to the company’s demise. Between the warehouse and production environments, significant losses occurred from damage to raw material inventory in handling because of improper handling due to the absence of appropriate equipment. This was by far the largest expense for the company. Rather than addressing the root of the issue, they decided to underreport and in some instances omit the losses altogether associated with bad inventory. Additionally, we had numerous contracts to supply products to customers on a scheduled delivery basis over periods of up to 12 months. When performance pressures were mounting, they began recording revenue from the sale of goods that were still in inventory and in some cases not scheduled for delivery anytime soon. The net effect of the actions was that there was an inflated net income which translated into improved financial performance. Consequently, the executive leadership deferred plans to undertake major restructuring and based on the information, made a commitment to pay large bonuses and profit shares when in reality, the company could not have afforded it. By the time the matter came to light, the company was so far behind that half the staff compliment lost their jobs and significant contracting of operations had to take place.

 

My proposed response to the situation described above.

In preventing unethical behaviour it is important that appropriate checks and balances are maintained as well as clear consequences for breaches (Zimmerman, 2017, p.3). To begin remediating the unfavourable situation above I would commission an immediate audit to formally identify all irregularities for action. By doing so I would be establishing a known starting point where records are as accurate as possible. Simultaneously I would undertake a review of all financial-related policies and procedures to ensure they align with industry standards and best practices then promulgate that information to all stall along with the consequences of any deviations. This would be complemented with structured training sessions where staff would sign confirming their participation. Finally, at least once quarterly I would require that synopsis of the financial year to date be prepared and presented to the management team for review. This would introduce an avenue for the asking of searching questions and increase the likelihood of identifying any anomalies or irregularities early enough to take timely action (Sherman & Young, 2001, p.131). Finally, very strong actions would be taken against the culpable individuals whose actions or inactions led to the unfavourable situation.

 

Measures to ensure that financial statements tell an accurate performance story.

According to Sherman & Young (2016), the nature of financial statements is such that skilled custodians can employ a number of processes to obscure or misrepresent financial information (p. 82). It, therefore, requires a multi-level approach to ensuring that all information is factual and accurately represents a company’s realities. Decisions based on erroneous financial information exposes both managers and the company as a whole, to unfavourable outcomes. Therefore the following measures can be implemented at a minimum to minimize the likelihood of financial improprieties and ensure the accuracy of financial reporting is maintained:  

1. Ensure clear policies and procedures are defined and communicated company-wide.

2. Ensure that there is sufficient segregating of duties for primary accounting functions such as recordkeeping, transaction authorization and reviewing/auditing. Litchfield (2011) reinforces the point that lax internal controls expose organizations to abuse and fraud particularly when there are insufficient levels of segregation of duties.

3. Ensure that an atmosphere of strict control with appropriate consequences for deviations is maintained from management all the way to the lowest staff.

4. Implementing at a minimum, annual auditing of the books by an independent external auditor. Among the benefits presented by annual audit reports is a guaranteed structured review of financial records and procedures, the identification of weaknesses in accounting procedures and the creation of an avenue for correcting financial problems (Flicek, n.d.).

 
 

Reference

s

Flicek, J. (n.d.). The Importance of an Annual Audit [Blog]. Retrieved from 

https://hub.associaonline.com/blog/the-importance-of-an-annual-audit

Litchfield, R. (2011). Accounting that kills. Profit. Jun2011, Vol. 30 Issue 3, p84-85. 2p.

Sherman, H., & Young S. (2001). Tread lightly through these accounting minefields. Harvard Business Review, 79(7), 129-135.

Sherman, H., & Young, S. (2016). Where Financial Reporting Still Falls Short. Harvard Business Review. Jul/Aug2016, Vol. 94 Issue 7/8, p76-84. 8p.

Zimmerman, J. L. (2017). Accounting for decision making and control (9th ed.). New York, NY: McGraw-Hill.

2nd Colleague to respond to:

I don’t have professional experience directly related to accounting and decision making so I decided to research a situation where fraudulent financial information was provided by a company. I’m sure everyone is familiar with the Wells Fargo fraud case that went on from 2002-2016. If you’re not familiar, Wells Fargo employees used fraud during this time to meet impossible sales goals (Flitter, 2020). They created fake accounts in customers’ names, signed them up for credit cards, and transferred funds from their accounts into other accounts (Flitter, 2020). It was discovered that these orders came from management as high as the executive levels. This caused the CEO to step down and resulted in Wells Fargo paying billions of dollars.

Unethical behavior is never okay in my book. It is extremely important for organizations to hire employees who are trustworthy, especially when they have financial responsibility within the company. If I were one of the Senior executives at Wells Fargo and came across management encouraging fraudulent activity, they would be terminated right away. A business cannot run without the trust of its customers. If their trust is compromised at the fault of our leaders and employees, it is damaging to the brand and could be detrimental long term. In addition to termination, depending on how serious the fraudulent activity was, I would also press charges. Seminars and trainings would be at the forefront of the agenda for any new and remaining employees to stress the importance of ethical behavior.

It is important for the public to recognize a company for what is true. Wells Fargo acted as if they were one of the most successful and powerful banks out there. For years they built their reputation on several lies without any concern with how it effects their customers and their brand. As a manager, I would be sure to include checks and balances as part of the normal routine for reviewing the organization’s financial information. Accuracy is important from both an ethical and a business standpoint. The use of fraudulent information would be completely prohibited and I would be sure to let everyone know of the serious consequences if used in any way.

Reference

Flitter, E. (2020, February 21). The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion. Https://Www.Nytimes.Com/#publisher. https://www.nytimes.com/2020/02/21/business/wells-fargo-settlement.html

Running head: ACCOUNTING DISCUSSION

1

ACCOUNTING DISCUSSION 2

Accounting Discussion

Name

Institutional Affiliation

Accounting Discussion

The organization I will be using for this discussion is Diamond Foods. Diamond Foods major goal was to become a major competitor in the industry. And it did so by engaging in questionable and unethical behavior. The leaders of the company implemented deceitful Accounting practices and attempted to monopolize the market which led to defrauding investors and resulted in falsified annual growth rates and earnings.

There were different reasons for the company’s problems. However, the biggest was the flaws in leadership. The main aim of the leaders in such a competitive market was to be a success at any cost. This clouded their decision making which led to a work environment which allowed illegal activities that later influenced the processes of an up and coming snack food giant. There were many warning signs such as a jump in profit margins, unusual timing of payments, and volatile inventories and cash flows. The top leaders and managers were not ethical and did not set examples for the employees. As a result, internal controls were not met due to not having clear guidelines. The steps in addressing the unethical behavior in the company would be the creation of more strict policies, ethical training on leadership, and internal audits. The auditors are required to be more diligent and more mindful to make sure that the integrity of reported financial statements is met.

As a manager of the organization, I would introduce corrective measures which included defined procedures with different levels of approvals, Robust Accrual Accounting practices, proper Accounting for Walnut growers, and improving the internal controls environment to include ethics training, and making sure that all legally required guidelines are met. These measures should be implemented and documented immediately with training modules for employees yearly. Rather than making constant changes to the name of the payments to the walnut farmers, a single name should be decided upon and made permanent. Also, the issue with payments, the company should consider going back to the previous model of payment to prevent mispricing on financial statements.

Reference

Diamond Foods Recovers from Accounting Scandal. https://danielsethics.mgt.unm.edu/