Corporate Chaos
... believe this situation falls under fraudulent financial reporting. Nevertheless, there maybe an intentional preparation of an ambiguous financial report, but I don’t believe this to be misleading. I see this case as a business financial opportunity that the top-level managers have a legal right to obtain the extra, end of the year bonuses. I justify my belief by a simple quote from the case on page 287, “because the estimate of completion is a matter of judgment” (Needles, Powers, Crosson 287). This quotation is the basis for my view-point. I see this as a key facture in determining whether or not there is an ethical dilemma. The quote is stating that there is no physical means of determining the difference between 75 percent of the five million dollar contract and 90 percent of the contract. However, I don’t see how there could not be a physical measurement on the percentage of work completed on the development of software, the book clearly states it is an estimate based exclusively on judgment. Maybe the project really is 90 percent completed and the company controller under estimated at a 75 percent completion rate. If that were the case there is differently not an ethical issue in the picture; nonetheless, at this point it is still a judgment based call. Looking at this from a top-level manager’s point of view, taking 90 percent of the revenue will obviously help their pocket books. There could be other motivate factors besides lining their pockets. Possibly, these senior managers are asking for a new report for other reasons in addition, meeting the expectations of the shareholders, or to obtain a loan from a bank. These top-level managers will be affected negatively if they don’t meet the completion rate needed to be a profitable company. None of Sensor’s senior accounting managers want to be demoted back to an entry level management position, or in worst care scenario fired. Either way you look at this, someone from within the company or outside the company will be finically damaged. With a 90 percent revenue take, maybe the shareholder will not see dividends this year. Perhaps, labor employees will receive the same wages, no pay increase or no holiday bonus. There is the possibility the banks, investors, customers, and other lenders could be negatively impacted. So back to my process of elimination that one can employ to come to a responsible and ethical conclusion. Until the company designs a way to accurately rate the percentage of completion within a particular software development package, the elimination of ethical issue is applicable. Perhaps with a few extra software developers and some o...