Reference no: EM132490717
Point 1: A large wholesale business in Melbourne's northern suburbs has run into difficulties in the past few years due to fall in demand from retailers for certain product lines.The CEO of the business and other senior managers, including the sales manager, were appointed on the basis that they will be paid bonuses at the end of the financial year depending on the level of profits made by the business. In recent times, these bonuses have been reduced somewhat and the sales manager has had difficulty meeting some of her private financial commitments. Just before the end of the financial year, a large order was received from a retailer for the supply of merchandise. The order was placed on the terms of DDP to the warchouse of the retailer, and hence revenue is to be recognised once the merchandise has been delivered to the retailer.
Point 2: Shipment of the order was not possible until 2 weeks into the new financial year. The sales manager, knowing that the entity's profits, and her bonus and that of the other managers, would be increased if the sale was recognised in the current financial year, has approached you, the accountant, to make an entry in the current period to recognise the revenue from this order prior to the goods being shipped.
Question 1: Who are the stakeholders in this situation?
Question 2: What are the ethical issues involved as a result of the sales manager's request?
Question 3: If you were the accountant of this organisation, what action (if any) would you take? Why?
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