Legality and Ethicality of Corporate Governance Eth 376 Week 4

Topics: Auditing, Financial audit, Internal control Pages: 3 (989 words) Published: August 24, 2013
Legality and Ethicality of Corporate Governance

The United Thermostatic Controls Company is a publicly owned company that manufactures and markets residential and commercial thermostats. As a publicly owned corporation, United Thermostatic Controls mutual stocks be listed and traded on the New York Stock Exchange. Frank Campbell is the director of the Southern sales division; however the Southern sales regional economics getting worse, the pressure to achieve sales revenue targets has created stressful and possibly unethical situations by Campbell. Campbell has pressure because he may not meet budgeted revenues for the fourth quarter, he researched purchase orders supposed to receive during late November and early December. With those purchase orders, Campbell decided to manufacture and ship orders prior to the end of the year to have the sales revenue contribute toward the fourth quarter. This action by Campbell resulted in sales revenue to be 18.6% increase over the actual sales revenue for the third quarter of the year and exceeded the budgeted amount by $80,000. This prompted the internal audit staff to question the appropriateness of the recorded revenue of $150,000 on two shipments made by the Southern division in the fourth quarter of the year. In the further investigation revealed that the customers did not want the delivery of product until the earliest of February 2011. Also one customer did not want partial shipment; however that is what they had received. This paper will address the legality of the activities based on federal, state, and local laws. Additionally, the criteria that the Sarbanes-Oxley act would apply to this case. Furthermore, a determination on whether or not the activities were equitable to internal and external stakeholders and what would be the best next step decision. Financial Statements are designed to define the health and well-being of a company. It is necessary that the information on the financial statements is accurate....
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