Discuss about the Blenheim Instruments Ltd for Jenny’s Dilemma.
Recognition & Measurement of Reduction in Realizable Value of Accounts Receivables
Accounts receivables refers to the type of current assets that the company has which reflects the balance payments pending to be collected by a company for its credit sales to its trustworthy customers. Companies generally involves themselves in selling goods or services on credit in order to increase its sales revenues and beat competitors in the market offering same or similar products or services. Due to this credit sales, accounts receivables gets generated in the balance of the company.
If it can be certainly estimated that there is reduction in the realizable value of accounts receivables for an entity due to some or the other internal or external factor then such reduction in realizable value of accounts receivables shall also be recognized in profit & loss statement of such entity.
Ethical Standards Iissued by Accounting Professionals & Ethical Standards Board (APESB)
Accounting professionals who are individually or collectively involved in the process of reporting and preparation of financial statements and information on which number of stakeholders depend on should invariably follow the ethical standards issued by APESB at all times (APES 300, section 300.2) but at times when the Member‘s duties for its parent entity and its expert duties for its stakeholders are in clash then in that times such members should support the moral and legal purposes recognized by the employer.
However, in situations when a colleague is of the opinion that the objectives established by the employer are demanding for unethical behaviors or actions on the part of the member then such member may even consider an option to obtain a legitimate advice on the problem and in thrilling situations when all the available defenses have been drained, can even consider to resign from the engaging company. (APES 300, section 300.15)
What Actions are Available to Jenny (Working as an Assistant Accountant in the Company) to Resolve the Dilemma She Faces?
Jenny Pike in order to avoid the dilemma due to the conflict she is facing among her role as assistant accountant in Blenheim Instruments and as a professional accountant associated with APESB can take following actions:
First of all she need to determine the possibility of accounts receivables not going to be recovered by the company with certainty and if she is not certain enough about the such possibility then she may consider accepting the view of Russell Bayer to leave the things till next year.
But if she is certain about the probability of receivables going bad, then she may adopt the following actions step wise (CPA Australia):
- She may in consultation with the accountant and management of the company should arrange for the allowance for accounts receivables not be able to collected as per relevant accounting principles
- If she cannot make management agree to provide for the allowance for doubtful debts then she may consider disassociating from the financial statements preparations task
- If she is not able to manage the conflicting the dilemma situation by undertaking the above mentioned solutions then she may receive a legal opinion on the matter which is also provided by APESB
- If still she is not able to resolve the issue then she may resign from the position of assistant accountant in Blenheim if she deems fit
AASB, Financial Instruments: Recognition and Measurement, Australian accounting standards board. Viewed on 03 September 2016, retrieved from< https://www.aasb.gov.au/admin/file/content105/c9/AASB139_07-04_COMPoct10_01-11.pdf>
APESB, APES 110 Code of Ethics for Professional Accountants, Accounting professional & ethical standards board, viewed on 03 September 2016, retrieved from <https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf>
APESB, Issued Standards, Accounting professional & ethical standards board, viewed on 03 September 2016, retrieved from <https://www.apesb.org.au/page.php?id=12>
CPA Australia, Accounting Professional and Ethical Standards, CPA Australia, viewed on 03 September 2016, retrieved from <https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-ethical-standards>
CPA Australia, APES 110: Code of Ethics, CPA Australia, viewed on 03 September 2016, retrieved from <https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-ethical-standards/apes-110-code-of-ethics-for-professional-accountants>