Ethics and Accounting: Linbarger Company

Ethics and Accounting Name Institution Ethics and Accounting Question One Linbarger Company has poor cash management practices. The problem they are experiencing right now could have been averted if their cash management was better. For instance, they could have collected the check for their largest company on time to ensure that by the end of the month, they have enough cash balance to honor their loan agreement. Ensuring that account receivables are not outstanding for long is part of good cash management (Harford, 2012). Further, Linbarger should have collected from their other account receivables before the due date. They need to have better cash management practices such as using an automated billing system to ensure that payments are not delayed. Another issue with Linbarger is that the company was unable to increase its cash account balance by sorting other avenues such as short-term investments. In addition, even if they had short-term investments, it seems they have a cash conversion period problem. This implies that they are unable to convert their investments into cash quickly so that they have enough cash account balance as per their loan agreement. Question Two Linbarger’s financial vice president’s decision to keep the books open for an extra day raises some ethical issues. One of the ethical considerations involved is fraudulent reporting. In accounting, fraudulent financial reporting occurs when accountants manipulate financial data so that they can produce the desired outcomes (Jeffrey, 2018). In the case of Linbarger, the account will be deceiving the insurance company because leaving the books open for a day will involve manipulation of financial information. In addition, the account will be failing to disclose crucial information to stakeholders, who in this case are the lenders. The correct information is that the company has a cash balance of $80,000, yet the insurance company requires a minimum of $ 200,000. This is, therefore, a disclosure violation because the transaction with Oconto Distributors will not be recorded according to the GAAP guidelines. In addition, the accountant will be compromising their integrity and objectivity by producing a misleading financial report in which crucial information has been concealed. They will also be acting under the influence of the financial vice president, thus compromising their objectivity. Question Three Failure to wait one more day before posting the balance has some serious repercussion to Linbarger and the employees. The company will be in violation of its loan agreement and the insurance company has the right to take actions. One of the actions would be to pen...