Using the sik Principles of AICPA Code of Professional Conduct. Identify the eth

Question

Using the sik Principles of AICPA Code of Professional Conduct. Identify the ethical is Digital Print case and to also guide Wally ethical decision making process. 1. LoneStar was formed in March 2015 with the goal of developing an outsource business for high-speed digital printing. The company is small and does not yet have a board of directors. The comparative advantage of the company is that its founder and pre for several years before starting LoneStar. Higgins recently hired Liza Doolittle to run the start-up business. Texas Inc., who holds the Certified Management Accountant (CMA) certification from the IMA, was hired to help set up a computerized system to track incoming purchase orders, sales invoices, cash receipts, and cash payments for the printing business. sident, Henry Higgins, owned his own print shop LoneStar received $2 million as venture capital to start the business. The venture capitalists were given an equity share in return. From the beginning, they were concerned about the inability of the management to bring in customer orders and earn profits. In fact, only $200,000 net income had been recorded during the first year. Unfortunately, Texas Inc. had just discovered that $1 million of accrued expenses had not been recorded at year-end. Had that amount been recorded, the $200,000 net income of LoneStar would have changed to an $800,000 loss. Texas Inc. approached his supervisor, Doolittle, with what he had uncovered. She told him in no uncertain terms that the $1 million of expenses and liabilities could not be recorded, and warned him of the consequences of pursuing the matter any further. The reason was that the venture capitalists might pull out from financing LoneStar because of the reduction of net income, working capital, and the higher level of liabilities. Texas Inc. is uncertain whether to inform Higgins. On one hand, he feels a loyalty obligation to go along with Doolittle. On the other hand, he believes he has an ethical obligation to the venture capitalists and other financiers that might help fund company operations.

Explanation / Answer

A guidline answer:

Ethical issued involved are:

In my learned opinion. Texas may approach Higgins directly in absence of any formal BOD and if he too feel reluctant and unwilling to decalare the misreporting than he may approach the various stakeholders directly

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