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Ethic Issue - Example Papers

Ethic Issue

Jenny O., CPA, is the new Assistant Controller for a small publicly traded company named Nebobites. Jenny spent a number years as an external auditor on the Nebobites engagement while working for WMUB & Company, CPA's(WMUB stands for We'll Make You Bucks). Nebobites makes dog treat products and was named after the founder's dog. Prior to going public in 2005, the Nebobites was a closely held business by the Smith family. After going public, the Smith family still retained a controlling interest in the Nebobites's stock. Since going public in 2005, the Company had been doing quite well financially. One of the keys to the Nebobite's financial success had been a strong, steady rise in ...

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that the Allowance for Doubtful Accounts balance seemed to be significantly higher than in the past. Jenny went back and reviewed the calculation for this year's estimate and noted that the entry for Bad Debt Expense had been based upon an estimate of 3% of net credit sales. Upon further review of prior years' estimates, she found that in the past the Bad Debt Expense estimate had been based upon only 1.5% of net credit sales.The increase in Bad Debts expense as a result of the increase in estimate materially affected the 2012 earnings. However, 2012 had been a great year for earnings, so the additional expense did not disturb the earnings growth trend Nebobites' had experienced in the past. However, upon further research, Jenny could find no justification for the increase in the Bad Debt Expense estimate from 1.5% of net credit sales to 3%. There had been no significant changes in the economic environment in which the company operated, no significant changes in the customer base ...

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PAPER DETAILS

Added: 4/10/2013 08:49:43 PM
Submitted By: zcyler7163com
Category: Economics
Type: Premium Paper
Words: 660
Pages: 3

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