Essay Example on New Business: Violation of Ethical Standards & Credit Purchases

Due to the minimal time to be taken for the overall lifetime of the business, I write to inform you that if there is a violation of ethical standards and why they are acceptable.

Since the business is a new entrant in the market, it was of a great imperative to purchase the items to be used that are cutlery and other kitchenware on credit. Additionally, it is of great use to finance the business on credit, which is to be repaid at the end of the operational time frame. From the given information about the company in the question it some of the internationally accepted accounting principles have been violated. First, the competence principle has been compromised. The skills used are questionable because the cost of ingredients is given in terms of percentage. This poses a significant danger because, during the calculation of profit, it may bring confusion. This may lead to arriving at spurious results, which may not of great use by the presidents and overall fraternity. Secondly, the performance of professional duties has been omitted in the sense that the items used in the restaurant are purchased on credit then sold after six months. This is ridiculous since the items are sold at half the price they were purchased. The accounts are poorly prepared because they fail to give the amount of taxes owed by the business at the end of the financial period. Also, the fee paid is given in terms of percentage as this fails to provide a clear picture of the actual amount to enable profound planning. The decisions on information to be disseminated is poorly organized since the ingredients do not show the exact prices. Information provided is not time-sensitive as it fails to show the activities to b carried in each month and expected returns. The employees allow the parties to be organized and executed without any down payment or any agreed consensus on how the repayment will be made. The ceremonies are held while the Employees are aware that they can bargain for a deposit to be made to mitigate risks associated. Employees have not sensitized the management of the failure risks involved since the business is operating from borrowed money and no ethical guidelines to cater to the emergencies as they arise. The company is planned without the target population in mind. If the target population is well supported, it can be more comfortable in simple terms, and it is poorly designed. The information on sales is based on estimates; this poses a significant problem since the forecast can give either below or above the estimated values. This obscures the overall planning and can lead the business into substantial losses if not put in check-in due time.

There is a conflict of interest as the manager is paid for the whole owing the business will be operational for only six months. The motivational is ill conscious since it is unfair for such activity to spend an amount which has no return; the amount for a six-month salary of the manager cannot be accounted for. Also, the employees fail to give the signal that things are going haywire by allowing the manager to receive a salary that is not worked for.

Figures are manipulated since the royalty paid does not denote any sale or transfer of any service to the cafeteria. The loss to the cafeteria after services are paid on credit without factoring these costs to the prices on items consumed during the events. The employees fail to negotiate with the financial institutions to extend the payment period to at least the end of the operational period since the business is operating on credit daily. The cash and capital stock are each 10 euros. This denotes a loss from the estimates given, but no planned is put in place to make sure the remaining period will operate at marginal revenue to carter for the damage from the previous period.The workers here are lacking objectivity here because they allow the business to thrive in unclear and imprecise calculations and estimates. They are professionally ill since they are allowing the predictions and business to succeed on unaccepted accounting principles. The accountants in question lack professional competency since all the calculations are nearly based on estimates without explicit calculations. This can make the client depend on the information, which can lead to losses without them on alerts. This poses a great danger to the ethical principle of professionalism.

There are a couple of recommendations which have been proposed. One is the down payment should be made by a client seeking services. This will enable the business not to operate under the pressure of not having enough funds. Secondly, the items should be leased instead of being purchased as this provides a cheaper method of making the business operate at a profit as this will save the business 50% proposed loss. Thirdly, the accountants should report actual figures and not estimates as this provides accurate and timely information to be used by the management to make profound decisions. The workers preparing the pain and accounting information to provide the target population to make forecasting more accessible and possible to the administration as it is from the target population profit projections can be made. Lastly, the management should give guidelines on the procedures to be followed on the client asking for credit services A down payment to be paid to ease the business from operating at a pressure and to mitigate the risks of untrustworthy customers.

Although the strategy employed is unfavorable. This will form a good base since the total average costs of all ingredients will be 32% of the revenue. The policy will also serve better because the parties organized will be paid on credit. However, since the salary of employees will be paid on monthly bases, water, power costs paid at the end of the period, then servicing of the loan with a six months' maturity is profound.

Conclusion

As disappointing this information will be, please bear with us because from our forecasting the business will have a positive turnover after the end of the operational period.

Thank you for your continued support.