You are a recently designated accountant. As a result of having your
designation, you have been hired as the controller at a national manufacturing company. Due to a recent economic slowdown, the company has been struggling to meet earnings targets. These targets are the basis for senior management bonuses. You report directly to the CFO.
This is your second month with the company; however, it is your first year end (December 31). The auditor will be coming to audit the books in three weeks. You have fi nalized the fi nancial statements, and
you have reviewed them with the CFO and the CEO.
The week before the auditor is expected to arrive, the CFO comes to your office and explains that the financial results are very disappointing. He explains that: on December 31, a sales contract was signed for $500,000 of goods with delivery to take place January 3. He asks you to record the revenue for this contract on December 31, the date the contract is signed and before the work is performed. This will result in early revenue recognition, and doing so will eliminate the overall net loss for the year.
You are married with a stay-at-home spouse and two small children. To celebrate your success, you recently purchased a new home. It cost a little more than you planned to spend and the mortgage payments are pretty expensive.
What would you do? What are the ethical issues you would need to consider?