You Have Recently Been Hired as the Assistant Controller for Clayton

question 68

Essay

You have recently been hired as the assistant controller for Clayton, Inc., a large, publicly held manufacturing company. Your immediate superior is the controller who, in turn, is responsible to the chief financial officer. The controller has assigned the task of preparing the year-end adjusting entry for bad debts to you. The allowance for uncollectibles accounts has a credit balance of $86,000 before the year-end adjustment. Your analysis indicates that an appropriate balance for the allowance account is $210,000. After showing your analysis to the controller, she tells you to adjust the allowance account to $310,000. Tactfully, you ask the controller for an explanation for the amount and she tells you, "We are having a really good year. Let's bump up the allowance."
Required:
Discuss the ethical dilemma you face. Consider your options and responsibilities along with the possible consequences of any action you might take.

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Definitions:

Resources

Assets, materials, and other items or capabilities that can be utilized to achieve goals or perform tasks.

Coaching Technique

An approach to personal or professional development where a more experienced individual guides another individual in developing specific skills and achieving goals through personalized advice and feedback.

Model Performance

An assessment of how accurately a predictive model represents the process it was designed to emulate, often measured in metrics such as accuracy, precision, and recall.