Question

You are an accountant in a large firm. Your boss tells you to use a controversial accounting practice, which will make the company’s profits seem higher. She tells you it is only to impress stockholders and will not be used in statements submitted to the IRS. What would you do?

Answer 1

Answer: One should refuse to opt such practices.

Explanation: For accounting we should opt International Financial Reporting Standards (IFRS) developed by the International Accounting standard board.

If the organization opt for different practice then it will violate

1. Consistency principle

2. Full disclosure principle

3. Materiality principle

In long run this will hamper organizations image, shareholders will loose trust which may even lead to changes in management even though.

I will try my best to explain consequences of same to my boss and ask her to change her decision.