Your unit has not been able to meet its sales goals for your quarter. Your assistant has suggested that you ship out enough goods to meet the quarterly goals by simply overshipping quantities on customer orders. When the goods are returned, you would simply take the returns in the next quarter after you have had more of an opportunity to meet goals. S uppose you learn that other divisions within the company have always engaged in this form of earnings shifting. The practice is still an ethical breach.

Question

Your unit has not been able to meet its sales goals for your quarter. Your assistant has suggested that you ship out enough goods to meet the quarterly goals by simply overshipping quantities on customer orders. When the goods are returned, you would simply take the returns in the next quarter after you have had more of an opportunity to meet goals.  S uppose you learn that other divisions within the company have always engaged in this form of earnings shifting. The practice is still an ethical breach.

Quizplus · Accepted Answer

Even if other divisions within the company engage in this form of earnings shifting, it is still unethical to overship quantities on customer orders and delay taking returns in order to meet sales goals. Such actions can result in inaccurate financial statements and mislead investors and stakeholders. Companies should strive to maintain ethical behavior and integrity in all their practices.

Your Unit Has Not Been Able to Meet Its Sales