Ethics case: The financial officer of Suit Ltd believes that the yearly allowance for impaired receivables for Shirt Ltd should be $185 000. The CEO of Suit Ltd, nervous that the shareholders might expect the business to sustain its 10% growth rate, suggests that the financial controller increase the allowance for impairment to $285 000. The CEO thinks that the lower profit, which reflects a 7% growth rate, will be a more sustainable rate for Suit Ltd.
Required:
(a) Who are the stakeholders in this case?
(b) Does the CEO's request pose an ethical dilemma for the controller?
(c) Should the financial controller be concerned with Suit Ltd's growth rate in estimating the allowance? Explain your answer.

Question

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The Answer of Ethics case: The financial officer of Suit Ltd believes that the yearly allowance for impaired receivables for Shirt Ltd should be $185 000. The CEO of Suit Ltd, nervous that the shareholders might expect the business to sustain its 10% growth rate, suggests that the financial controller increase the allowance for impairment to $285 000. The CEO thinks that the lower profit, which reflects a 7% growth rate, will be a more sustainable rate for Suit Ltd.
Required:
(a) Who are the stakeholders in this case?
(b) Does the CEO's request pose an ethical dilemma for the controller?
(c) Should the financial controller be concerned with Suit Ltd's growth rate in estimating the allowance? Explain your answer.

Ethics Case: the Financial Officer of Suit Ltd Believes That