USA Small business bookkeeping ethics

[annibe11e]

One of the reasons I entered the accounting field is ethics. Unfortunately, my ethical standards have been tested with almost every job I've had. I'm now doing the books for a small company part time. The owner doesn't like the way the reports look when we use discount accounts, purchase and customer. She wants the transactions to be altered to net payment, so as not to use any discount accounts. She rationalized that this reflects "true costs". I told her it was incorrect and she said that's the way she's always done it and "it's not that big of a deal". I'm really struggling with this. On a personal level, she's trivializing what I do. I don't feel comfortable doing my job "wrong". The changes to the recording of transactions with understate inventory, retroactively understate sales and AR, AP...This is a privately held company so it has few shareholders and there is no intention to deceive or take advantage of anyone. I'd love to hear some opinions on this.

 

[Fidget]

I don't see what your issue is to be honest. Discount Allowed/Received accounts might be useful for an organisation that might want to keep tabs on what the value of them is for whatever reason, but they're quite unnecessary to use outside of that.

Nor can I see any ethical implications of using them or not using them.

 

[Allan Schilter]

When I was an active CPA we restated the clients books and moved their discounts to Cost of Sales and if material we allocated some of the discounts to inventory.
Don't confuse text book accounting with real world accounting. The owner uses the net cost in setting the selling price. You should always be ethical but I do not see anything in your post that would indicate you are unethical in following the owners direction.

 

[smallbushelp]

I agree with Fidget and Allan. If this is a small, privately held entity, then full blown GAAP accounting really isn't necessary for them. And that's not wrong. That's something I had to get used to as well. One thing I no longer do with some of my small business clients is account for depreciation every month because it doesn't mean anything to them. They don't like to see a non-cash expense on their financial reports. So now, I just figure it at year end so it gets into the tax return. No harm, no foul.