an analysis of FASB guidelines in organizations
Introduction
The discussion is an analysis of FASB guidelines in organizations. FASB is an abbreviation of the Financial Accounting Standards Board, which is a privately owned company tasked to establish, publish, and update financial accounting records for non-governmental organizations. The case is composed of two participants, a controller, and financial vice president. While the two were discussing the company’s financial management, the financial vice president advice controllers not to implement PASB rules since they would impact earned income adversely.
Question One
Conflict of interest is among the ethical issues evidenced in the case which came as a result of varied opinions between Becky Hoger and her financial vice president. Becky was with the idea that implementing FASB early would boost the company’s financial reporting in addition to identifying errors. On his part, the financial vice president was against the idea of actualizing FASB guidelines since they would affect the annual reported income. The above illustration brings forth a conclusion that Becky was faced with an ethical challenge which required further consultation. Precisely, Becky did not understand the reason as to why her senior most personnel did not see the need for putting in place FASB early yet it is always the recommended time by financial practitioners (Harmon & Ntseh, 2016). Overall, Becky seemed to be driven by giving out the actual status of the company, while the vice president wanted to give out untrue picture of the company’s income.
Question two
Based on the proposition of the case, the financial vice president acted improperly. Among the vital roles attached to financial vice president is overseeing all the general ledgers transactions, directing accounting operations, financial reporting, payroll, payables and receivables (Harmon & Ntseh, 2016). Notably, all the above listed entries are affected once the annual reported income is altered. To this end, the financial vice president knew some of benefits attached to him could be affected adversely, hence opting to suspend implementation of FASB. The financial vice president acted improperly when it came to ascertaining company’s financial outcome with respect to compliance requirements, trends, profits and costs. The above outlined measures needed to be determined with the aid of new FASB guidelines, and it would be much helpful to integrate the guidelines early in advance. It is always the mandate of financial vice president to provide strategic guidelines for capital financing (Harms, 2020). In this case, annual reported income was not adjusted as far as new FASB guidelines are concerned, and financial reporting was addressed inappropriately.
Question Three
Early incorporation of FASB guidelines by Hoger would promote production of timely, accurate, and transparent reports. Integrating the guidelines early in advance will instigate investors to have full trust of the companies system, there by investing more on other products or bringing in referrals (Harmon & Ntseh, 2016). It is worth noting that invertors requires to be provided with all material facts regarding investments which includes FASB guidelines. Putting in place FASB rules requires a collective responsibility among stakeholders during formulation of guidelines. Once FASB rules are established early in advance, openness will be created among the stakeholders and investors hence promoting formulation of conducive working guidelines (Harms, 2020). Establishing FASB by Hoger will contribute hugely in providing a company with an oversight. A company’s oversight can be defined as well strategized plan and guidelines based on PASB, which will be used to achieve company’s goals. The oversight role does not only concern a company, but also the investors and stakeholders for them to make investment moves that are line with informed financial decisions (Harms, 2020).
Question four
The decision against implementation of FASB will impact the controller more adversely as compared to financial vice president. Based on the provisions of FASB, it the responsibility of the controller to ensure that all financial records are accounted for appropriately (Harmon & Ntseh, 2016). Financial controller are tasked to track all the annual entries of the respective managers to ensure that adherence of all financial standards guidelines. Controllers are believed to be the lifeblood for company’s success since they oversee all levels of accounting including financial activities and managerial accounting. Again, it is the responsibility of controller to identify and rectify the various accounting errors made by subordinate staff (Harmon & Ntseh, 2016). On the other hand, financial vice president is only required to ensure that financial recording standards are met. Again, they aid in approving and correcting the methods used for calculating financial records (Harmon & Ntseh, 2016). To this end, it is evident that financial vice presidents will be adversely impacted by late implementation of PASB rules.
References
Harmon, F., & Ntseh, D. (2016). The New FASB & IASB Revenue Recognition Standards; Implementation and Effects.
Harms, C. (2020). FASB Lease Accounting Standard Update 2016-02: An Exploration of Similarities and Differences to IFRS 16 (Doctoral dissertation).