Courseworks Essay on Northwest Construction CO. Inc

Courseworks Essay on Northwest Construction CO. Inc

Northwest Construction CO. Inc.

The cases are an analysis of Lou Naber and Bob Hawkins who are the co-owners of Northwest construction., Inc. These two partners begun business 10 years ago. Based on their partnership agreements, the partners almost share company ownership and they have identical employment as well. Their personal affairs, however are not in good order hence, they need to develop ideal personal financial plans. Both parties reveal their future to the tax accountant regarding the kind of development plans they have for their finances. Lou reveals the plan of his wife to resign from her work to stay at home. Bob, on the other hand has a potential investor interested in financing the company and may possibly buy Lou ownership for $ 35,000 and a 3 month salary as agreed. The tax accountant keeps the data and information confidential.

The case is comprised of ethical concerns related to confidentiality. It involves not just the accountants but the partners, Lou and Bob. Both partners reveal sensitive and personal information that can harm the productivity and reputation of the company. As such, the personal accountant is expected to keep the information he receives as confidential. Confidentiality seeks to provide the appropriate information regarding financial items.

According to the regulations and rules of AICPA code of professional conduct, accountants are supposed to enhance data confidentiality and sensitive information that is disclosed by partners. This arises because partners have complete confidence and trust in the professional accountants. As such, the accountant should never use the information that is disclosed by partners for personal judgments and gains (Deaney &Whittington 120).

In the event partners disclose information to any party, they will be liable for imprisonment. Disclosure reveals unscrupulous behaviors of accountants that might lead to serious legal issues. The alternative solution to the unethical concerns can include negotiations between the two parties. As such, appropriate legal guideline suggests the accountant must always maintain his ethical duty and obligations. The outcome of any unwarranted disclosure of confidential information results to using of the accountant and some of the remedies provided can harm the party.

Unexplained Prosperity

This case explains that Henry Monterrey made the observation there was an increase in revenues of the company. It identifies the investigation Henry carried out towards the contributors of the massive increase on revenues. After the CPA carried a review of the invoices, he made the discovery that there was a decrease in unit costs of goods leading to increase in revenues. Monterrey was responsible for determination of the changes on revenues before publication of the results. Relevant discussion with brothers on unexpected results, one of these brothers was not appreciative of the meeting. Monterrey interviewed some of the long term employees in order to get a better reasoning and some information. The cases assumption related to candy stores caught laundering money and this explains the increase in revenues with constant volumes and prices. This also provides background information on the case of the company.

The ethical issue in this case is lack of information on large revenues increase. The company was ever well-informed on reasons behind its increased revenues. Such changes in proportion of cost of revenues and goods raise concerns to the CPA who was unable to publish the financial statements. These ethical concerns involve the management and brothers who seem unaware of the unusual findings. The misrepresentation of the financial statement items has its basis on performance of the services to the requirements of the company. According to the responsibilities and rules of the accountant, they are supposed to adhere to proper accounting standards in order to interpret the information according to the performance of the organization.

According to AICPA code of professional conduct, CPAs are required to exercise competency and caution. In specific occurrences, it provides parties are supposed to participate in the appropriate compliance with accounting policies and standards. The CPA is supposed to act on the basis of accosting principles as they are required. In the event of disclosures on immaterial of revenue items, the credibility of information in financial statements is affected. This is related to financial statement information confirms with the Generally Accepted Principles (GAAP) (Whittington 121). The accounting principles need compliance with rule 102 on relevant judgments. The assessment of relevant financial items helps in compliance with material misrepresentation, violation of laws and professional options. The outcome of such cases is alteration of revenues to fit accurate revenues of the company.

Smoke and Mirrors

This case describes Chuck Adkins, a CPA who has completed his tax returns for XYZ Company. Adkins has worked in the business for 5 years in which the public has expanded immensely. XYZ has failed to keep accurate information and records. In review of past company information, it is revealed there are discrepancies in the company books in which case the assets are undervalued. In a clear discussion with Chuck Adkins, Hanson states there were plans to go to Big Bank for a given amount of working capital and expansion of the business. The credit line will also be offered on the basis of inventory, equipment and receivables.

The case as well states the bank needed to a review from an accountant so as to approve the loans. Adkins informed Jack about a $ 125,000 loss in which his response was he expected that. Jack was convinced the loss was made the prior year. Big Bank will not be ready to guarantor their credit. Jack argues that accountants can interpret and report data so as to reflect a false picture. The attitude Jack has towards the accounting firm is quite adverse.

The ethical issue that crops up on objectivity and integrity of the accountants and Jack reduces conflict of interests in the current situation. This is related to misrepresentation of facts based on judgments of other individuals. The members are expected to consider the information misrepresented on assists undervalued. The misjudgment of financial statement entries can be accepted under rule 102 of the AICPA, section 501. The section states the financial statements and reports should never contain any misleading or false information and data (Brooks & Dunn 34).

There are different alternatives to minimization of conflict of interests in the company under this case. It can take into consideration professional judgments of accountants that ignores are subjective implications of the business owners. What is more, the company needs to consider appropriate tax reporting and records. The outcome of the case is one related to obtaining correct figures of financial statement items. Jack is not supposed to insist on manipulating the figures and data, but rather, fair judgment of past data. This will help to obtain credit line from the Big Bank.

 

Work Cited

Brooks, J. Leonard., and Dunn, Paul. Business & professional ethics for directors, Executives & accountants. Boston, MA: Cengage Learning, 2009. Print

Delaney, R. Patrick., and Whittington, O. Ray. Wiley CPA exam review 2011, auditing and attestation, volume 1. New York: John Wiley & Sons, 2010. Print

Whittington, O. Ray. Wiley CPA exam review 2013, regulation. New York: John Wiley & Sons, 2012. Print

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