What constitutes manipulating financial statements? The executives of Xiaping Trading Company are meeting to discuss the past year’s results before releasing financial statements to the bank. Wai Lee, the company’s owner, comments, “This has not been a good year! Revenue is down, and expenses are way up. If we are not careful, we will report a loss for the third year in a row. I can temporarily transfer some land that I own into the company’s name, and that will beef up our balance sheet. Brent, as accountant, can you shave $500,000 from expenses? Then we can probably get the bank loan that we need.” What should Brent do? What would you do if you were Brent?
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