As the Accountant for this company, when approached by the CEO
with such unethical requests, I would remind the CEO that I have an
ethical responsibility to the Company to ensure that the financial
representation of the company is in accordance with GAAP.
Based on a construction start date of June 2016, the company is not
eligible to capitalize interest for 2015 and modifying current year
expenses to account for prior year interest, and capitalization of “lots
of overhead” and current year salary would be considered unethical
and fraudulent. I would attempt to explain the three questions
identified by GAAP; “Does the asset qualify for interest
Capitalization”, “Over what period can interest be capitalized”, and
“What amount of interest can be capitalized” (Whalen, Jones, &
Pagach, 2017), but based on the CEO’s previous requests, I am not
confident that the CEO would be receptive to my explanation, or
refusal to comply with their request.
As difficult as such action could be, request from a CEO that
implicates fraudulent and/or unethical behavior and financial
reporting should be reported immediately.
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate
Accounting: Reporting and Analysis. Boston, MA: Cengage Learning.
