What Is the Accounting Problem that the Linbarger Company Faces?
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The Linbarger Company faces the accounting problem of the lack of financial means on its corporate banking account. The employees mentioned in the scenario (assistant controller in charge of general ledger accounting and financial vice president) are responsible for this issue as it might lead to such unfortunate outcomes as the business’s shutdown and their unemployment. The Linbarger Company has to maintain its balance at the point of 200 000 dollars or higher every month according to the loan agreement with insurance service. However, the account holds only 80 000 dollars at the end of June.
What Are the Ethical Considerations in This Case?
The first ethical consideration in the case described above implies dishonesty with the insurance company that gave Linbarger a loan. It is necessary to follow all the requirements of the discussed agreement to maintain a trustworthy and wise relationship between the two businesses. Another ethical consideration is the fact that many employees might be deprived of their workplaces due to the potential mistake of their superiors. Managers must always think about various consequences that might influence their teams as it is not fair to make other people suffer because of one person’s mistake.
What Are the Negative Impacts that Can Happen if Lisa Infante’s Instructions to Wait One More Day to Post the Balance Are Not Followed?
As it is mentioned above, many unfortunate outcomes might happen if the instructions of Lisa Infante are disregarded. The first issue is the fact that the loan agreement might be brought to an end by the insurance company. Hence, Linbarger might not have any financial means to support its processes that gain profit. However, the company is about to receive a check from one of its largest customers. The sum in the document sent via mail amounts to 150 000 dollars that can be used to meet the loan agreement. Lisa Infante insists on the Linbarger assistant controller to wait and use the money from the check that is coming on the next day. Otherwise, the business’s workers might become unemployed, whereas the company remains at risk of being put out of business.
Who Will Be Negatively Impacted if the Assistant Controller Complies with the Financial Vice President’s Instructions?
It would be proper to mention that other people might be negatively impacted if Lisa Infante’s instructions are followed, and the assistant controller agrees to wait for another day to post the lacking balance. For instance, employees might not receive their wages on time if the company has to use all its money to meet the loan requirement. Therefore, the paychecks might be provided to the workers once the balance is approved by the insurance company.
What is One Alternative that Could Be Pursued in This Scenario?
There is one alternative that might be used or considered in the situation discussed above. The assistant controller might contact the insurance company and explain that the balance will be posted as soon as Linbarger receives another payment from its customer. It would be advantageous to ask permission from the insurance service to wait for twenty-four hours. The situation might be resolved without any issues if both sides develop mutual understanding. However, another partner might refuse to wait for another day. In this case, it would be advantageous to report the sum of 200 000 dollars and add the expected money afterward.