I enjoyed the conversation about GAAP and earnings management related to the “Be Careful What You Wish For: Middle” case. The conversation was brief, but got me thinking about the ethics of earnings management. GAAP accounting must reflect in good faith the true financial position of the company and the current reality as is. It’s not about presenting a set of manipulated numbers that paint a pretty picture. GAAP requires revenue recording when there is compelling evidence of an agreement, assurance of collectibility, fixed or determinable price, and delivery. If Sarah sees revenue before delivery, she would be violating GAAP and participating in channel stuffing. It wouldn't be about earnings management. In my opinion, there is a fine line between ethical and unethical earnings management. For example, a company may have the choice of quickly adopting an accounting standard or waiting until it becomes mandatory. Would it be unethical to delay implementation because the current standard makes revenue look better? I could argue the decision either way. I could argue that the decision is unethical, because the intention is to present revenues in a better light than they would be under the new standard. I could also argue that it is ethical. The current standard reflects current revenues and it would be best to delay implementation until a final version is released or until all questions have been answered. Implementing new standards can also be costly, and part of the reason for delaying implementation could be cost delay. GAAP allows management to exercise discretion in areas where guidance is not black and white; however, I believe they grant discretion under the assumption that managers will be impartial and act in good faith. As mentioned in class, if Sarah...... middle of paper......the heart breaks. How would I feel if the people unable to get donations were my family members? How would I feel if I knew they needed medical supplies, but I couldn't receive them because someone like me upset a donor? I agree with the suggestions discussed, such as making businesses understand what would happen if the IRS or the public discovered that donors were overestimating their donations. I don't like the idea of ​​valuing things differently from corporations. I would feel bad knowing that this non-profit organization was dealing with individuals who were deceiving others. I would support unethical behavior and would not want to be associated with it. At the same time, if nonprofits dissociated themselves from corporations that refuse to properly value their donations, the individuals who need it most would be the ones who would suffer the most...