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Legality And Ethicality Of Corporate Governance

974 words - 4 pages

Legality and Ethicality of Corporate Governance Paper
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Legality and Ethicality of Corporate Governance Paper
United Thermostatic Controls is a publicly owned company that manufactures and markets residential and commercial thermostats (Mintz & Morris, 2011). As a publicly owned company, United Thermostatic Controls common stock is listed and traded on the New York Stock Exchange. Frank Campbell is the director of the Southern sales division. Because of regional economics getting worse, the pressure to achieve sales revenue targets has created stressful and possibly unethical situations. Mr. Campbell feeling the pressure that he would not meet budgeted revenues for the ...view middle of the document...

It is imperative that the information on the financial statements is accurate. The Sarbanes-Oxley (SOX) Act of 2002 was a law that was passed because of a few unethical companies who decided that they could skew the information to have the financial statements reports what they wanted but not what was the truth. It was apparent to the auditors that what they found was a situation that needed further investigation. The information already coming to light did not follow suit with the essence of what the SOX Act was established for. The Statement of Auditing Standards requires the internal audit staff has responsibilities to the company in which they work for. The auditors went to Tony Cupertino. Mr. Cupertino is the director of the internal auditing department as well as a licensed Certified Public Accountant (CPA), and also holds the certified internal auditor (CIA) designator. Mr. Cupertino approached Mr. Campbell regarding the transactions and was told that upper management would support the actions of Mr. Campbell because of the pressure to exceed budgeted revenue as to not affect the stock prices.
The ethicality issues of this case are simple. The transactions were done during the fourth quarter but at the cost of not doing proper business with the customers. The customers did not receive their product how they requested it (full shipment of product versus partial), and delivery not when they wanted the product. The customer’s wishes were ignored to make the financial statements reveal what they wanted to make the company look better than what it was actually doing. The other ethical issue is the Mr. Cupertino would like to take his concerns further to Walter Hayward, who is the chief financial officer, who is also a member of the board of directors, or to take his concerns to the audit committee. Mr. Cupertino understands that the majority of the members of the board, including those on the audit committee, have ties to the company and members of top...

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