ACCOUNTING Essay Example | Topics and Well Written Essays - 500 words

ACCOUNTING - Essay Example The organization entered into illegal accounting territory when $5.6 million of products that had been shipped early were returned. As a means of avoiding the revenue setbacks, the organization decided to conceal them by dispersing them between four departments, in effect allowing the organization to largely reflect the earlier robust financial statements. These accounting problems impacted the company’s financial statements as they erroneously reflected robust sales and revenue figures when in reality the payments for these products had not been received. In further concealing the true incoming revenues through dispersing losses among departments, the financial statements did not accurately reflect sales figures for the period, as this practice concealed a 6% loss. Two primary employees at Cutter & Buck were sanctioned for their participation in these accounting practices. The first employee is Stephen Lowber, the former chief financial officer. Lowber was sanctioned through paying a $50,000 fine and agreeing to not serve as an officer or director of a pubic company. In addition Lowber agreed to cooperate with investigators into detecting past accounting fraud at the company. The second employee involved was David ‘Andy’ Hilton, the former regional vice president for sales. Hilton was sanctioned through agreeing to pay a $25,000 fine. It’s clear that their actions pose ethical problems for the company. When one considers that the organization is a public company they are not simply responsible internally, but also must be responsible to stakeholders. Capital market research demonstrates that one of the primary contributing elements to shifting stock prices is revenue figures. Through the organization’s practice of recording revenue early and then concealing losses among departments, they were able to produce inaccurate statements that may have contributed to inflated equity valuations. Other groups of individuals