Deb Faust has a problem. She is a financial vice president and while ranking the securities in the portfolio for the first time, she realized that she could increase her net income for next year by including only those trading securities that have increased in value . She realized that she could also classify securities that had declined in value as long-term, non-trading securities and that her 2014 net income would not be affected. Her problem comes from her controller, Jan McCabe, who doesn't agree with her. McCabe wants to do just the opposite by arguing that the company is having a good profit year and that recognizing losses now will help smooth out revenue for next year. In future years, in the event of an unprofitable year, the company will make intrinsic gains. Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original Essay Marketable securities owned by a company are presented in the financial statements, but how the company classifies and records them depends on how long the company intends to hold them. them. Marketable securities may be classified as marketable or nonmarketable, available for sale, or held until maturity. How the company reports them will change the market price of the securities and may affect the financial statements. Securities are recorded on the balance sheet at their fair value but if there is a variation in fair value then this variation is recognized as a gain or loss. By ranking titles the way everyone wants, it will have an effect on the bottom line. If they classify the gains as trading securities, it will show up as a gain on the income statement, just as classifying the losses as non-trading securities will carry over to next year. By proposing these different scenarios, each employee is acting unethically. None of these proposals comply with International Financial Reporting Standards (IFRS). IFRS uses an accounting framework to determine the measurement, recognition, presentation and disclosure of all significant items appearing in financial statements. By manipulating securities reporting, it is not an accurate presentation of the financial statements. Not only does this inaccuracy affect employees, but it will also affect the company's officers, directors, shareholders and any potential investors who may view these financial statements and believe that it is an accurate presentation of net income. of the company. This can also affect potential auditors who will most likely find this anomaly. Faust and McCabe can certainly address the issue of selling unprofitable stocks with management and ensure they are aware of potential issues with how they will be classified. These securities can be sold and doing so would not be unethical. Faust and McCabe should go through the steps of the ethical decision-making model and think about their ethical dilemma. They can start by addressing the legal issues that will arise if they list the titles as they propose. If they evaluate the consequences of their decision by listing possible outcomes, can they get a better idea of ​​what could happen if they price the securities incorrectly? They must also consider other stakeholders in this decision and how they will be affected. They must also consider their professional obligations with this proposed course of action. Both Faust and McCabe demonstrate poor judgment.