Newbie seeking information on S.O. ETHICS 799
SOX-Migration last edited by
I am new to SO…
I need to know if there is any information within SO regarding the closing out of monthly business.
I have heard of companies that within the last ten days of every month, they halt the processing of customer orders when their monthly published financial goal has been reached.
They restart processing orders on the first day of the next month.
Where does SO cover this business practice or is this just an ethics question ???
kymike last edited by
This has may have nothing to do with ethics or SOX or accounting rules. This appears to be managing the business to achieve desired results. There are a few things that management can manipulate in order to impact the financial statements. Not selling product for a certain period of time is one of those. As long as they are not accepting any orders and are properly recording orders in the period received, then they are likely OK. However, if they are receiving orders, but just letting them accumulate until the next accounting period, then they have stretched the rules too far and could be accused of accounting manipulation.
Denis last edited by
Agree with kymike to a point.
It really depends on what you mean by not processing orders though. Ordinarily there would be no revenue recognition at the order processing phase so there is potentially no accounting impact. However, if they are receiving orders and despatching goods but not recording them until the next period then this is FRAUD - a very common one called teeming and lading .
If, as kymike suggests, management is just manpulating its business to achieve desired result there may still be a problem as management will not be adequately discharging its duty to shareholders.