Discuss about the stakeholder analysis framework

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Reference no: EM132735673

Question: Far-2-Ezy (F2E) makes loans to high-risk borrowers. F2E borrows from its bank and then lends money to people with bad debt histories. The bank requires F2E to submit quarterly financial statements in order to keep its line of credit. F2E's main asset is Bills Receivable. Therefore, Uncollectable Bills Expense and Allowance for Uncollectable Bills are important accounts.

Katie Bamber, the owner of F2E wants net profit to increase in a smooth pattern, rather than increase in some periods and decrease in others. To smooth out increasing net profits, Katie underestimates Uncollectable Bills Expense in some periods when net profits don't fit the smooth increasing pattern. In other periods, Katie overestimates the expense. She reasons that over time profit over statements roughly cancel out profit under statements.

Use the stakeholder analysis framework described in accounting information system, to analyse if there is an ethical dilemma if Bamber smoothes out profits. Make reference to accounting standards, disclosure and any laws applicable in your.

Reference no: EM132735673

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