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Heidi Hart, the vice president of financial operations for Castle Candy Manufacturing Company and the controller, Linda Brown, are reviewing the financial statements for the prior two years of 2003 and 2004. Heidi notes that the gross profit margin on sales has increased significantly for 2004 over 2003. Linda is aware that a major reason for the increase is the company's decision to reduce the estimate of warranty and bad debt expense. Heidi is preparing a media communication emphasizing the company's efficiency in controlling costs and she believes this is the reason for the increase in gross profit. Linda is not sure whether to tell Heidi the real reason for the increase.

What is the ethical dilemma in this situation?
Should Linda remain silent? Why or why not?
What responsibility does Linda have for the representations in the media release?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9410698

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