Reference no: EM132737459
Sue Gupta was the CEO of Clark Co. which served as the general contractor for the construction of the air ducts for large shopping malls and other buildings. She prided herself on being able to manage her company effectively and in an orderly manner. For years, there had been a steady 15% ~ 20% growth in sales, profits, and earnings per shares that she wanted to continue because it facilitated dealing with banks to raise expansion capital. Unfortunately for Janet Lowell, the CFO the situation ahs changed.
"Janet, we've got a problem. You know my policy of steady growth - Well, we've done too well this year. Our profit is too high: it's up to a 35% gain over last year. What we've got to do is bring it down this year and save a little for next year. Otherwise, it will look like we're off our well managed path. I will look like that I didn't have a handle on our activity. Who knows, we may attract a takeover artist. Or we may come up short on profit next year."
"What can we do to get back on track? I've heard we could declare that some of our construction job are not as far along as we originally thought, so we would only have to include a lower percentage of expected profits on each job in our profit this year. Also, let's take the $125,000 in R&D costs we incurred to fabricate a more flexible ducting system for jobs A101 and B102 out of the job costs in inventory and expense them right away."
"No listen, Sue, don't give me any static about being a qualified accountant and subject to the rules of your profession. You are employed by Clark Co., and I am your boss, so get on with it. Let me know what the revised figures are as soon as possible.
Requirement: Based on the information given by the case, please answer the following questions:
a. What is the definition of stakeholders in general?
b. Who are the stakeholders involved in this decision? List at least five groups of stakeholders and explain your answers.
c. What are the ethical issues involved? (list at least one and explain why it is an ethical issue)
d. As a professional accountant, what should Sue do, and why?