Improper

Accounting
For Sales

Abuton, Patrcia
Concon, Khytzz Hannah Marie
Pamayloan, Jayson
Sarabia, Mary Rose
Tizon, Jerre
 You are one of the three partners in a firm of
accountants. Five years ago the firm was appointed
as external accountants to a young, successful and
fast-growing company, engaged to prepare year end
accounts and tax returns. The business had started
trading with a handful of employees but now has a
workforce of 200, while remaining below the size of
company requiring a statutory audit.
Due to your close relationship with the
directors of the company and several of its staff, you
become aware that staff purchase of goods
manufactured by the company are authorized by
production managers, and then processed outside
the accounting system. The proceeds from these
sales used to fund the firm’s Christmas party.

Integrity
Objectivity
Professional Competence and Due Care
Professional Behavior
Obtain Relevant Facts
• You are one of the three partners in a firm of
accountants
• Five years ago the firm was appointed as external
accountants to a young, successful and fast-growing
company, engaged to prepare year end accounts and
tax returns
• Due to close relationship, you become aware that
staff purchase of goods manufactured by the
company are authorized by production managers,
and then processed outside the accounting system.
• Sales were used to fund the firm’s Christmas party
Identify Ethical Issues From
The Facts

• Is it appropriate of you to
account staff sales for the
firm’s Christmas Party?
Who is affected?
You (Jerre)
 He’s actions will be affected

Attitude towards the firm will be

affected
Violate the fundamental principles of an
accountant
Who is affected?
Company
May affect the company’s realistic
presentation in preparing Financial
Statement
Who is affected?
 Firm
Damage of reputation
Who is affected?

Staff and Production Managers

Incompetent and lack of credibility
Identify Alternatives
1. Continue their ways to account the sales for the
firm’s Christmas Party
2. Follow the fundamental principles of an accountant
3. Suggest to the management that instead of
accounting the sales they could either allot the
funds in their monthly salary
4. They will not have their Christmas Party
5. Quit working in the company
Identify Consequences
(Short Term)
1. They will enjoy that day
2. Conflict will arise
Identify Consequences
(Long Term)
1. Continue to do their unethical
practices of the firm
2. They will receive less amount than
what they have expected
 What is best
decision to be
made?
Decision To Be Made
As an aspiring accountant
he should follow the
fundamental principles of an
accountant for benefit of all.