Accounting Essay: Discuss the ethical implications of the scenario

1. You are the Accountant for Duke Street, Inc. and your boss asks you to provide the bank with a profit forecast for the coming year. The company is requesting a loan from the bank; the loan is very necessary. The forecast that you provide to the bank will determine whether or not the bank issues the much needed loan.

Your boss is convinced that profits will be at least $500,000 � anything less than $500,000 and the bank will not approve the loan. Your analysis indicates three possible outcomes:

Outcome 1: If sales of the new product are extraordinary, then profits will exceed $500,000.

Outcome 2: If sales of the new product are modest, then the profits will be $100,000. This is most likely to occur.

Outcome 3: If the sales of the new product fail, then the company will experience a loss of $600,000

If the bank does not grant the loan, then the new product will not launch and bankruptcy is a real possibility for the company.


Discuss the ethical implications of the above scenario. Below are questions that may help guide your discussion. The questions are a guide (a sentence or two answering each question is insufficient). You should provide a well-organized thoughtful discussion of the ethical situation.

What dilemma does the accountant face?

Who are the potential stakeholders and how might they be affected by the decision of the accountant?

What choices does the accountant have? Evaluate the choices, i.e. who benefits or who is hurt by the choice(s).

What action would you recommend? How would you respond to the boss?
What should the company do going forward?

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