FINANCIAL REPORTING

Financial Reporting



Ethical Dilemmas in Financial Reporting

Introduction

The course of the study will focus on the ethical dilemmas of financial reporting in reference with the case study of “eBay, Inc. Stock Option Plans”. Founded in 1995, eBay Inc. connects hundreds of millions every day people around the world, giving them the chance to explore new opportunities and innovate together. EBay Inc. does this by providing options for Internet platforms for commerce, payments and global communications. Since its inception, eBay Inc. has expanded to include some of the best-known brands worldwide, among which may be mentioned eBay, PayPal, Skype, Stub Hub and Shopping.com. EBay Inc. headquartered in San Jose, California.

Discussion

Financial reporting is most important matter for every public limited company. The financial reporting of the company represents the performance of the company any misrepresentation of the data can lead to serious causes. The potential investors made their decision of investment by analyzing the financial reports of the companies. Following are the sketchy purposes of financial reporting (Beasley, 2005).

Knowing what causes the effect has varied over the assets of the company at the close of the past year.

Explain how funds obtained.

Explain how to use financial resources.

Highlight the correlations between the individual source categories and individual categories of loans.

Determine the percentages of the sources and uses of resources on the same total.

Ethical Dilemma in a Given Scenario

The basic ethical dilemma in the case is the use of “window dressing” by the eBay. The company used the window dressing technique to show that the company is operating in profit. In the year 2000, the company reported a profit of $48 million by using face value of options instead of fair value of stocks in their financial reporting (Beasley, 2005). If the company would have followed the international accounting standards by using the fair value of stocks for their monetary representation, then it would have incur a loss of almost $91 million.

Importance of ethical considerations

Ethics can be defined as rules of conduct recognized with respect to a specific class of human actions, culture and behaviors. Ethics has been emphasized most significantly in the Bible's Ten Commandments, a guide that is still used by much today (Beasley, 2005). Ethics used to govern actions within an entity particularly, in businesses and, it checks and, monitors whether the people in the organization follow a certain predefined ethical conduct. Ethics also govern the way businesses are carried out and their contributions towards society. Today, only those businesses, survive that assume their ethical duties and fulfill those most prominently. An Ethical Policy details an organization's commitment to best practice and make ethical considerations a primary decision making factor in everything the organization does. Every company and the individual has their own individual definition of ethics and it is essential for a company to

Characterize their company cipher of ethics to their employees and;

Perform enterprise very cautiously without intentionally enforcing unethical behavior.

Companies that are in a part of a business-to-consumer relationship forced to be more cognizant of these ...