Maintaining a cash balance

You are the assistant accountant at Krispics Co. Ltd, a distributor of snack foods. Krispies has a large loan from a bank, and part of the loan agreement stipulates that the company must maintain a Cash at Bank account balance of at least S75 000, reviewed monthly by the bank manager. At 31 March you report to the accountant, Naomi Kidman, that the cash balance is only S50 000.

Naomi is concerned and instructs you to keep the cash receipts records open for one more day. She explains that if Krispies reports this cash balance to the bank, the company will default on the loan agreement and the bank may foreclose on the loan. The company could be forced into liquidation and all employees will lose their jobs. Naomi's friend Brian Sheen is the accountant at Freers Foods, one of Krispies' largest customers. She says she will ring Brian and get him to send through a cheque for S35 000 (in part payment of Freers Foods' account) dated 30 March, which you will receive tomorrow, 1 April.

Naomi instructs you to include this cheque in the cash balance that will place Krispies in the clear with the bank.

Required:

A. Who are the stakeholders in this situation?

B. What do you think are the ethical issues involved here?

C. List the courses of action you might take and the consequences of each.