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1. Do you agree with Leroy statement that it doesn’t matter what the numbers look like since he is the sole owner? Even if it is true that Sims owns the board of directors, what should be their role in this matter?

2. a. Assume Sims is a CPA and holds the CMA. What are the ethical considerations for him in deciding whether to tweak the numbers? What should Sims do and why?

b. Assume Sims did a utilitarian analysis to help decide what to do. Evaluate the harms and benefits of alternative courses of action.

3. Assume Sims decided to reduce the estimated overhead for the year by 50 percent. How would that change the net income for the quarter? What would it be as a percentage of sales? Do you think Leroy would like the result? Do you think he will be content with the tweaking occurring just this one time?

 

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