Alice wants to buy bonds, but her husband, Pete, thinks stocks would be a better deal. Pete was watching a finance show on TV that said stocks would be going up and that now is the time to buy stock. He called Alice over and said, "I told you so." Alice told her husband that it was no time to take a risk with their money. Do you think Pete is correct in his thinking?

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Casey DurganLv2

30 Sep 2019

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Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from the college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked to prepare a sales budget for the year 2011. He conducted a thorough analysis and came out with projected sales of 250,000 units of product. That represents a 25 percent increase over 2010. Daniels went to lunch with his best friend, Jonathan Walker, to celebrate the completion of his first solo job. Walker noticed Daniels seemed very distant. He asked what the matter was. Daniels stroked his chin, ran his hand through his bushy, black hair, took another drink of scotch, and looked straight into the eyes of his friend of 20 years. âJon, I think I made a mistake with the budget.â âWhat do you mean?â Walker answered. âYou know how we developed a new process to manufacture soaking tanks to keep the ingredients fresh?â âYes,â Walker answered. âWell, I projected twice the level of sales for that product than will likely occur.â âAre you sure?â Walker asked. âI checked my numbers. I'm sure. It was just a mistake on my part,â Daniels replied. âSo, what are you going to do about it?â asked Walker. âI think I should report it to Pete. He's the one who acted on the numbers to hire additional workers to produce the soaking tanks,â Daniels said. âWait a second,â Walker said. âHow do you know there won't be extra demand for the product? You and I both know demand is a tricky number to project especially when a new product comes on the market. Why don't you sit back and wait to see what happens?â âBut what happens if I'm right and the sales numbers were wrong? What happens if the demand does not increase beyond what I now know to be the correct projected level?â Daniels asks. âWell, you can tell Pete about it at that time. Why raise a red flag now when there may be no need?â Walker states. As the lunch comes to a conclusion, Walker pulls Daniels aside and says, âJack, this could mean your job. If I were in your position I'd protect my own interests first.â Questions 1. What should an employee do when he or she discovers that there is an error in a projection? Why do you suggest that action? Would your answer change if the error was not likely to affect other aspects of the operation such as employment? Why or why not? 2. Identify the stakeholders potentially affected by what Daniels decides to do. How might each stakeholder be affected by Daniels's action and decision? Use ethical reasoning to support your answer. 3. Assume Daniels is both a CPA and holds the Certified Management Accountant (CMA) certification granted by the IMA. Use the ethical standards of these two organizations to identify what Daniels should do in this situation.

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Read or listen to Morals in Business: Walter Pavlo Share your thoughts and opinions regarding this real life situation. Be sure to include your ideas about what businesses can do to avoid similar problems.

https://spotlightenglish.com/listen/morals-in-business-walter-pavlo

Transcript Voice 1 Hello. Iâm Marina Santee. Voice 2 And Iâm Ruby Jones. Welcome to Spotlight. This programme uses a special English method of broadcasting. It is easier for people to understand, no matter where in the world they live. Voice 1 Would you consider stealing six million [6,000,000] dollars from a company, if you had the chance? Most people would immediately answer ânoâ to this question. The majority of people consider themselves to be good, honest citizens. Walter Pavlo used to describe himself like this. Walter was a young, successful business man. He studied hard. And he worked hard. In time, he got a good job at an international communications company called MCI. MCI managed billions of dollars each year. Walterâs office was a highly pressured working environment. Walter worked hard to meet targets and goals. If someone had asked him back then - would he steal six million dollars from the company? He would have answered, âNo way!â Yet only a few years later, Walter went to prison for stealing money from MCI. What made this good man turn to crime? Here is his story. Voice 2 Walter Pavlo was born into a good family. His parents taught him Christian values. He said; Voice 3 âI was taught, âdo not stealâ; âdo not cheatâ; âbe honestâ; âbe truthful in everything that you do.â Voice 2 Walter held these values for a long time. However, slowly, other values in the business world began to influence him. At the age of thirty-two, Walter was a senior manager at MCI. He managed millions of dollars. His job was very pressured - and difficult. Then, for the first time in his life, it looked like Walter would not meet his targets. He had to do something. He asked a co-worker for advice. His friend told Walter to cheat a little. He told him that everyone else was doing it. It was normal. Voice 1 Pavlo looked around him. It seemed that his friend was right. The world of business was full of successful cheats. Maybe a little dishonesty was not so bad. In his mind, Walter rationalised cheating. He made it seem reasonable. Voice 2 Pavlo learned how to hide customersâ debts. He made small changes in the companyâs financial books to make them look better. This meant that Walter kept his good record of achievement. And it meant that the companyâs records looked good to investors. Voice 1 However, this led Walter to a bigger temptation. Why not use the same method of dishonesty to enrich himself? Again, Walter rationalised his plan. He said later; Voice 3 âTo me it looked like everyone was cheating. And I joined in. It did not seem that bad. Customers were getting richer. And I wanted my share.â Voice 2 Something else was happening inside Walter. He was becoming hostile in his heart. All around him were lies and cheats. He saw that people only cared about themselves. He saw the company and customers making themselves richer. He said, Voice 3 âI hated the customers. I hated the company. And then, I hated myself. Then, nothing mattered anymore.â Voice 1 And so, Walter set up a secret bank account in the Cayman Islands. Customers with debts paid money directly into this bank account. Then, Walter made their debt disappear on MCIâs records. Over a six month period, Walter and a co-worker took six million dollars! Voice 2 However, as time passed, Walter became afraid. He lived in fear of getting caught and arrested. The lies and secrets created much pressure. Walter said he became emotionally unbalanced. He came to believe that he would surely be caught - it was only a question of when. Voice 1 After a few months, MCI noticed a series of payments going into a Cayman bank account. They questioned Walter about it. Walter remembers; Voice 3 âI just said I did not want to talk about it. In a way I could not avoid uncovering my secret, because I was no longer able to hide what I was doing.â Voice 1 Walter resigned from MCI. He hoped that the investigations would stop. But they did not. MCI called in the police. Voice 2 Pavlo admitted his crime. His punishment was a prison sentence of three years and five months. He would also have to sacrifice some of his future earnings - over the next twenty-seven [27] years. Voice 1 In prison, Pavlo learned a lot about himself. He looked at the process that resulted in such severe crime. He said; Voice 3 âI do not think of myself as a bad person. For me to do something bad, or illegal, I have to make myself believe it is not bad. I rationalised, reasoned, what I was doing. I did this so much that I became far removed from reality. I told myself things like - everyone else is doing it, I need to get by, my family deserves this - and so on. This is what happens to a lot of people. They will rationalise in order to do something wrong.â Voice 2 Walter finished serving his difficult sentence in 2003. Life outside of prison was not to be easy either. His wife had divorced him. His friends had disappeared. No one wanted to employ the man who had stolen millions. However, people did want to hear about it. Voice 1 Many businesses saw the power of telling such a story. It could prevent their employees making the same mistake. Business schools and universities wanted their students to hear Walterâs story. Voice 2 And so Walter decided on a new kind of work. Today, he goes into business schools, companies and universities. He tells his story. He warns people of the easy path that leads to crime. He gives this message to business students: Voice 3 âThe chance of you facing a difficult moral decision at some time in your business life is one hundred percent. It will happen. There is no way round it...â âYou will never know what your values are worth until the test. The things that your parents have taught you, the things that you learned in school. What about them? When you are tested, what will you do?â Voice 1 Walter Pavloâs values had not survived this test. However he hopes that his weaknesses may strengthen others. He hopes that his story will strengthen peopleâs values. And then, when they are tested they will not fall. Voice 2 The writer and producer of todayâs programme was Marina Santee. All quotes were adapted for the programme. The voices you heard were from the United Kingdom and the United States. Computer users can hear our programmes, read our scripts and see our word list on our website at http://www.radio.english.net. This programme is called, âMorals in Business: Walter Pavloâ Voice 1 You are welcome to comment or ask about todayâs programme. You can e-mail us at radio @ english . net. Thank you for joining us today. Until next time. Goodbye.

It is early January 2015. Your brother-in-law, Sam Sneed, has been working at the accounting firm (Indiana Accounting Associates, LLC â a partnership for tax purposes) for 15 years now in auditing and is excited to report to you that he has been offered a promotion to partner effective as of January 1st, 2015. The managing partner has just taken him to lunch and discussed Samâs increased responsibilities and his targets for billable hours and new clients as a partner. Sam informed you that he will be offered a profits interest. At the time of receipt, the partnerâs liquidation value in the interest received is zero, so Sam has been told he does not have a capital interest and no research is needed on capital interest. He is excited and wants to stay with the partnership for many years.

Sam has been told he will receive a vested profits interest of $50,000 in 2015 which, upon receipt, supposedly may be taxable. You are told to assume that the receipt would be W-2 wages as he was an employee when he received the profits interest if taxable. It will not be treated as a guaranteed payment.

Sam also indicated that there was some chatter in his tax department that the law was unclear on this matter and that he would have to evaluate his tax situation two ways; 1) as if he met a so called safe-harbor; and 2) as if he did not meet the safe-harbor.

Sam asks you for guidance on whether the receipt of the profits interest will be taxable or could it be classified as nontaxable. With any potential tax deductions he may get from the partnership now that he is a partner, Sam is not sure it matters. But he trusts you and wants your advice.

You have your own accounting practice and have prepared his tax returns for many years. You should support the brother-in-law. Why?

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