Analyzing Ethical Issues in Accounting: Linbarger Company Case Study

This case study delves into an ethical dilemma encountered by Linbarger Company, focusing on a situation where the company faced a cash shortage and was required to maintain a minimum balance to comply with a loan agreement. The assistant controller was asked by the financial vice president to manipulate the accounting records by delaying the closing of the receipt book to misrepresent the cash balance. The assignment explores the ethical considerations involved, including the breach of trust with the insurance company and the potential negative impacts of both complying with and disobeying the unethical instruction. The study also suggests alternative solutions, such as seeking an extension from the insurance company. The conclusion emphasizes the importance of ethical decision-making in business, highlighting the need to choose the right course of action, even when faced with pressure to compromise ethical standards for short-term gains. The case study concludes with a list of relevant references.

ETHICS IN ACCOUNTING

ETHICS IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................1
Ethical consideration in this case.....................................................................................................1
Negative impacts to be faced upon disobeying Lisa Infante...........................................................2
Instructions......................................................................................................................................2
Negative impacts on complying with Lisa’s order..........................................................................2
Alternative to be used......................................................................................................................2
Conclusion.......................................................................................................................................2
References........................................................................................................................................3
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ETHICS IN ACCOUNTING
Introduction
Every opportunity comes with two ways of doing it, Ethical and Unethical. The Business
being a social organ should be conducted in such a manner that it does not hamper the interest of
the society and also to itself. Ethics are those codes which guide and decide the behavior of the
individuals and also judges their decisions on the basis of morale and values. So the decisions
taken on the basis of trust and integrity are called ethical decisions. In the course of the business,
there come situations where one is questioned for taking of ethical decision, which is to be
handled very carefully and resolved to maintain ethical integrity (Gon, May 2017). This case
study relates to issues raised in accounting which are to be identified as either ethical or unethical
by answering a few questions (Zhang, March 2015).
Accounting problem faced by Linbarger Company
The Linbarger Company had taken a loan from an insurance company, which required
the company to maintain a cash balance of $200,000 or more in its account on a monthly basis.
But at the end of the month that is June 30, the cash balance in the account of the company was
$80,000.So the shortage of cash balance was the main problem faced by the company in this
scenario (Jude Mikal, Mid 2016).
Ethical consideration in this case
Ethical consideration basically means the knowledge of morals or principles carefully
being thought of over the period of time and here in this scenario trust breach is the major issue
which is being discussed (Bump, 16 October 2015).
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ETHICS IN ACCOUNTING
I the assistant controller of general ledger accounting at Linbarger Company was asked to
keep the receipt book open for one more day by Lisa Infante The financial vice president. Lisa
had asked one of the biggest customers of the company and he had given a word to send a check
of $150,000 in the duration of a day. This situation was more or less a type of cheating with the
insurance company as there was no assurance that the check will be on time. Thus the company
was cheating the insurance company in some of the other way.
Negative impacts to be faced upon disobeying Lisa Infante
Instructions
If Lisa Infante instruction of waiting for one more day for posting the balance would
not have been followed then the loan agreement given by the insurance company would had been
at default due to breach of its conditions and entire business of the company could have shuttled
down and along with it the company would have faced a tremendous loss in pecuniary as well as
reputation terms. (author, May 2017).
Negative impacts on complying with Lisa’s order
If Lisa’s orders are compiled then it will be considered as a sort of cheating with the insurance
company because the account balance was being misrepresented on a future promise of which
the company was not 100% sure of whether the check will be on time or not. It may also have a
negative impact on me as an accountant as I had cheated in my work of accounting, company’s
image could also have gone down if the check would not have been reached on time so harsh
steps could have been taken against it. The insurance company would also have to bear some of
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the other kind of loss due to non-complement of its policies or were being breached by the
company.
An alternative to be used
Instead of faking or misrepresenting the account balance the company might have sat
along with the insurance company and tried to convince them for giving them the extension of 5
to 6 days duration so that in that while they might have received the check and upgraded their
account balance or
Could have tried to arrange the money from some other source on an immediate basis
(Bump, 16 October 2015).
Conclusion
Things can either be wrong or right, legal or illegal, good or bad and also ethical or
unethical and we have to choose among them that which way we need to go through to reach our
target and achieve our goals. In this case, Lisa has asked me to take a step which was right in the
perspective of the company but was ethically incorrect. Things were needed to be solved and the
crises of the shortage of money were to be overcome and this work could easily have been done
through a healthy conversation and requests of time extension instead of showing fake or
misinterpreted account.
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References
adiVeisiaHoumanLiaghatia1AliAlipourb. (January 2016). Ethics in Accounting. Developing an
ethics-based approach to indicators of sustainable agriculture using analytic hierarchy
process (AHP).
author, J. J. (May 2017). Ethics in Accounting. Simon S. M. HoEmail authorAnnie Yuansha
LiKinsun TamFeida Zhang.
Bump, J. B. (16 October 2015). Ethics in Accounting. Accounting for Technical, Ethical, and
Political Factors in Priority Setting.
Gon, a. J. (May 2017). ethics in accounting. Ethics in Accounting: A Decision-Making Approach.
Jude Mikal, S. H. (Mid 2016). Ethics in Accounting. Ethical issues in using Twitter for
population-level depression monitoring: a qualitative study.
Zhang, S. S. (March 2015). Ethics in Accounting. CEO Gender, Ethical Leadership, and
Accounting Conservatism.
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