Question

Please help solve or correct

Natalia Wallace is the new controller for Smart Software, Inc., which develops and sells education software. Shortly before the December 31 fiscal year-end, James Cauvet, the company president, asks Wallace how things look for the year-end numbers. He is not happy to learn that earnings growth may be below 13% for the first time in the company's five-year history. Cauvet explains that financial analysts have again predicted a 13% earnings growth for the company and that he does not intend to disappoint them. He suggests that Wallace talk to the assistant controller, who can explain how the previous controller dealt with such situations. The assistant controller suggests the following strategies: (Click the icon to view the suggested strategies.) Read the requirements. is inconsistent with IMA standards Is not clear whether it would violate IMA standards Does not violate IMA standards Requirement 2. How might these inconsistencies affect the company's creditors and stockholders? The inconsistencies noted for Smart Software, Inc. particularly impact the financial statement information provided by financial accounting to external creditors and stakeholders. They will be led to believe the operating performance (profitability) of the company is better that it really is. This misrepresentation may result in the investors selling stock when they may have held it with the correct information. Similarly, creditors may grant credit to the company with the false income information when they may not grant credit with the correct income information. Requirement 3. What should Wallace do if Cauvet insists that she follow all of these suggestions? The controller should resist attempts to implement a, b and c and should gather more information about d. If the president ignores Wallace, then Wallace needs to consider if she wants to work for a company that engages in unethical behavior. Choose from any drop-down list and then continue to the next question.

Answer 1

Refer the below images for the above mentioned questions, in a detailed way of explanation.

Answer: suggested Strategies are inconsistent with which IMA of these Standards. * If the goods have been received, postponing recording of the purchase understates liabilities. This is one thical and incosistent with the IMA Standards even if the supplier agrees to delay billing - * The software has inconsistent with ot been the IMA sold. Therefore, it Standards to record would be as sales- it & Sales Delaying in this with the year and closing incorrectly records next year's year's sales. This is unethical as inconsistent IMA Standards. & The appropriate allowance for bad debts is a difficult judgment. The decision should not be driven by the desire to meet a profit goal. It should be based on the like lihood that the company will not collect the debts- We cannot determine this without more information. However, Since the company comphasizes earnings growth, which a lead to sales to customers with weaker credit records, reducing the allowance seems questionable. It is not clear Whether this Strategy is inconsisdent with the IMA Standards. * If the maintenance is record. This Strategy controller, so it does postponed, there is no transaction is beyond the responsibility of not violate IMA Standards. to the

• Management accountability is management's responsbility to the various Stance holders of the company. Each sh of Stakke holders has an interest of some sort : business Stakeholders include suppliers, employees, naors, investors, creditors, governments and communities - Managers are accountable to the Stakeholders have a responsibility to wisely manage the company's reso customers " employees, Managers provide information about their deasions and the results of those deasions to the Stake holders Finanwal accounting provides financol Statements that report results of operations, financial and cash flows both to managers and to external Stakeholders Managerial accanting provides the information needed to plan y control operations Managers an responsible to many stakeholders. So they must plan and control operations carefully Marking decisions that cause the company to decline will affect many different groups, from investors to comployees, and may have an economic impact on the entire Community. The inconsistencies noted particularly impact the provided by financial for smart software; Enc. financial Statement information accounting to external Stockholders. They will be ted to believe the operating performance (profitability of the company is better that it really is. This misrepresentation may result in the Prvestors selling Stock when they may have held it with the correct information. Similarly, creditors may grant exedit to the company with the false income information when they not grant credit with the correct income information.

The controller should resist attempts to implement a b and c and should gather more information about d. It the president ignores Wallace, then Wallace needs to consider if she wants to work for a company that engages in unethical behavior. wyt