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Week 1 Discussion
Mark Wrublewski
South University
BUS3055
Prof. Stottlemyer
7/6/2019
Part 1
Scenario 2
Walker the CEO of Memphis Mini Golf and Go-Carts (MMGGC) wanted to sell the business to Go-Carts, Gold & Games. The audit report created by the firm's accountant Blanchard showed that the business of MMGGC was profitable. Go Carts made the deal based on the audit report but later found that MMGGC was insolvent. Go Carts filed suit against Walker and Blanchard. Go Cart claimed that Blanchard had misrepresented the facts.
Article 1.5 of the AICPA Code of Conduct states that the accountant must display integrity while conducting audits of the company. This reflects stating accurate figures and mentioning the right figures. The conduct of Blanchard depicts that he had neglected the AICPA Code of Conduct CITATION AIC18 \l 1033 (AICPA, 2018). He willingly neglected his duty of quoting accurate figures without any bias. Section 5062.2 of AICPA Code of Conduct mentions that the accountant must act independently and fulfil his commitment. This suggests that even if the company influenced the accountant to misrepresent the information he must follow his commitment and act in a fair manner. The accountancy laws and ethical standards prevent accountants from misrepresenting financial information CITATION FeO18 \l 1033 (Ochotorena, 2018). Walker has neglected his duty as the owner of the company to mention accurate financial figures.
The examination of the scenario indicates that Go Cart will win the case because the owner agreed to purchase the business after considering the misrepresented figures that reflected the profitable condition of MMGGC. Both Walker and Blanchard are liable to pay the damages because they were engaged in a fraudulent act of misleading auditory report. MMGGC hired Blanchard for manipulating the financial statement so Walker will lose the case and is liable to pay the damages.
Part 2
Metlink Enterprise is aiming at selling electronic devices through an online portal. The company might face product liability issues such as the owner may face payment gateway issue. In vetting payment gateways the owner must find if there are limitations to that product. Another challenge faced by Metlink is of patent rights. The company is selling electronic devices so it must purchase a trademark or patent for selling the products. If the company is the infringing trademark or patent rights it will face liability and damages.
Uniform Commercial Code (UCC) is applicable because it involves a set of regulations for managing the selling of commercial products. This reflects that if the company fails to comply with the laws of UCC it will face liability CITATION Sta173 \l 1033 (Elvy, 2017). According to the rules of UCC, the seller (Metlink Enterprise) will bear the loss if the product sold to the purchaser is damaged. The seller is liable to bear the risk until the buyer takes the delivery. If the buyer rejects to accept the product within a reasonable time, Metlink will bear the loss. In this case, Metlink must obtain warranties from UCC. The warranty contains a statement of fact and description.
Free On Board (FOB) shipment is applicable on the shipments made via waterways. In FOB the buyer bears the responsibility of the product as soon as it is placed on the vehicle. At this point, the title of the goods is transferred to the buyer. While in FOB destination the seller bears the liability event when the goods are transmitted. In case of damages, the seller will be liable to pay the damages CITATION Ufu18 \l 1033 (Asanwana & Efombruh, 2018).
FOB shipment offer many advantages such as the seller don't bear the responsibility of arranging sea transportation or face losses in case of damages. It has some disadvantages such as seller has to manage export permits. FOB destination offers some advantages to the buyer as the seller is responsible for the freight and insurance cost. It also involves disadvantages such as the seller bears the loss if goods are damaged.
References
BIBLIOGRAPHY AICPA. (2018). AICPA Code of Professional Conduct. Retrieved 07 06, 2019, from https://www.aicpa.org/research/standards/codeofconduct.html
Isandlwana, U., & Efombruh, O. (2018). Understanding FOB and CIF Contracts: And When Property and Risk Pass in These Transactions. SSRN.
Elvy, S.-A. (2017). Hybrid Transactions and the INTERNET of Things: Goods, Services, or Software? Washington and Lee Law Review, 74 (1).
Ochotorena, F. (2018). Creative Accounting: Ethical Challenges Confronting External Auditors Behind the Cooking of the Books.
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