| Course | AC504 Ethical Issues in Business and Accounting |
|---|---|
| Unit | Unit 3 |
| Paper type | Code of conduct review |
| Length | About 600 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC504 Unit 3
Nineteen Small Adjustments, One Smooth Line: A Unit 3 Code of Conduct Review of Reserve Management
[Student Name]
Purdue University Global
AC504: Ethical Issues in Business and Accounting
Unit 3 Code of Conduct Review
[Instructor Name]
[Date]
The packaging manufacturer, its controller and every figure are composite; the code, speech and article cited are real.
The Schedule
Over eight quarters the controller booked nineteen adjustments to four reserves: inventory obsolescence, warranty, bad debts and accrued bonuses. Each was between $8,000 and $40,000, each came with a stated reason, such as "updated obsolescence estimate" or "revised collection outlook," and each sat inside a range that a reasonable accountant could defend. Taken together, they raised earnings in the five quarters that would otherwise have fallen short of the owners' target and lowered them in the three quarters that would have exceeded it. Reported EBITDA stayed within $15,000 of the target every quarter. Without the adjustments it would have swung between $210,000 below and $190,000 above. Over two years, the adjustments net to zero.
The Code, Part by Part
The principles. The Code's principles ask members to act with integrity, objectivity and due care and to serve the public interest (American Institute of Certified Public Accountants [AICPA], 2014). The conduct sits uneasily with all of them, but principles are aspirational; a violation needs a rule.
The Integrity and Objectivity Rule for members in business. Under this rule a member may not knowingly state facts falsely or let someone else's wishes override professional judgment. Each adjustment, read alone, is an estimate within a defensible range, and the controller would say he exercised his own judgment, not the owners'. The rule is hard to apply entry by entry.
The Acts Discreditable interpretation on false and misleading entries. A member who knowingly makes, or permits, materially false and misleading entries in an entity's financial records commits an act discreditable to the profession. Here is the difficulty: none of the nineteen entries is material on its own, and none is outside a reasonable range.
The review's central finding is that the misrepresentation lives in the pattern, not in any entry: a series of individually defensible estimates, chosen each quarter to land on a target, produces earnings that tell owners and lenders the business is steadier than it is.
What Finally Reaches Him
Two things reach the conduct. First, the Integrity and Objectivity Rule turns on knowledge, and the schedule is evidence of it: an estimate chosen because of its effect on a target, rather than because the evidence pointed there, is not an exercise of independent judgment. The controller's own emails, which tie each adjustment to "where we need to land," make the point. Second, the false and misleading entries interpretation asks whether the entries mislead. The smoothed series misled readers about earnings volatility, which matters to lenders setting covenant headroom and to owners valuing the business. The materiality question is answered by the pattern's effect, a swing of $400,000 hidden from view, not by the size of each entry.
This is the conduct the former SEC chairman described as "cookie jar reserves," set aside in good years and drawn down in bad ones (Levitt, 1998). Research on earnings management distinguishes legitimate judgment from management of reported results by asking whether choices are made to meet a target rather than to reflect the economics (Dechow & Skinner, 2000).
Conclusion
The Code reaches the controller not through any one entry but through intent shown by a pattern. His defense, that each estimate was reasonable, is true and beside the point.
References
American Institute of Certified Public Accountants. (2014). AICPA code of professional conduct. AICPA.
Dechow, P. M., & Skinner, D. J. (2000). Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons, 14(2), 235-250. https://doi.org/10.2308/acch.2000.14.2.235
Levitt, A. (1998, September 28). The numbers game [Speech]. NYU Center for Law and Business, New York, NY, United States.
What the AC504 Unit 3 assignment asks for
The third AC504 unit asks you to review conduct against a professional code. Begin with a schedule or summary of the conduct, with dates, amounts and stated reasons. Then take the relevant parts of the code in turn, from principles to specific rules and interpretations, and explain for each whether and how it applies. Be honest where an individual act, taken alone, does not violate a rule; the unit often turns on that difficulty. Identify what, if anything, finally brings the conduct within the code, such as evidence of intent or the combined effect of many acts. Connect the analysis to the wider literature on the practice involved. Conclude with whether the member's defense holds. Cite the code, a regulator's statement on the practice and academic research in APA 7.
How the AC 504 Unit 3 example is put together
The sample's schedule describes nineteen adjustments to four reserves, each between $8,000 and $40,000, raising earnings in five short quarters and lowering them in three strong ones, and compares reported EBITDA with what it would have been. The code section takes the principles, then the Integrity and Objectivity Rule, then the interpretation on false and misleading entries, showing why each struggles with individually reasonable estimates. The highlighted sentence locates the misrepresentation in the pattern. A section on what reaches the controller uses his own emails as evidence of intent and measures materiality by the hidden $400,000 swing. Levitt's cookie jar speech and Dechow and Skinner frame the practice, and the conclusion rejects the defense.
AC504 Unit 3 rubric: what earns full points
Code reviews in AC504 earn points for accurate application of each relevant part of the code and for intellectual honesty about its limits. Graders reward students who admit when a single entry does not breach a rule and then find the principled route by which the code still applies. Evidence of knowledge or intent should be identified specifically. Materiality should be analyzed in terms of the effect on readers, not only the size of each entry. Connecting the conduct to recognized literature on earnings management earns credit. Reviews that declare a violation without engaging the difficulty, or that cite the wrong part of the code for a member in business, lose substantial credit. A clear schedule and APA 7 citations support the review.
AC504 Unit 3 help: mistakes that cost points
Many Unit 3 reviews assert that the controller obviously violated the code without showing which provision applies or why. Others go the opposite way and conclude no violation because each entry was within range, never considering the pattern. Interpretations written for members in public practice are applied to a member in business. Materiality is judged entry by entry. Intent is assumed rather than shown from evidence such as correspondence. The schedule is missing, so the pattern is described but not demonstrated. If your section's case involves a different practice, such as revenue timing or expense capitalization, a writer can review it against the code in the same structure.
Get an AC504 Unit 3 example written to your instructions
Forward the Unit 3 conduct, the professional code this course follows and the rubric. The review lays out the conduct as evidence, tests it against the code's provisions from most specific to most general, names the gap honestly and shows what still reaches it, returned in 24-48h. Nothing is billed for the first one, and the manufacturer is fictional. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC504 Unit 3 questions, answered
If no rule was broken, how can the conduct be a violation?
The AICPA Code does not stop at its specific rules. Members in business are expected to apply its conceptual framework when a situation is not addressed directly, identifying threats to compliance and evaluating whether safeguards reduce them. The AC504 example shows that the bonus and the owners' expectations created threats nobody addressed, which brings the smoothing back within the Code's reach.
Is the review about the AICPA Code or the company's own code?
The professional code, because the controller is a licensed CPA and Unit 3 prompts often set a profession's standard against conduct that slipped past it. The company's employee code gets a sentence: it banned fraud and conflicts and said nothing about estimates. If your section reviews a corporate or IMA code instead, the same specific-to-general method applies.
Where can I find a free AC504 Unit 3 sample paper?
This page holds a full AC504 Unit 3 code of conduct review of a composite packaging manufacturer's controller and nineteen reserve adjustments, testing the AICPA Code part by part and locating the violation in the pattern, with APA 7 references.
Why does the review treat the pattern as the misrepresentation?
Because smoothed earnings tell readers the business is steadier than it is. Each estimate alone was defensible, but choosing them quarter by quarter to hit a target hid a $400,000 swing that lenders and owners would want to see.
What evidence shows the controller's intent?
His emails tied each adjustment to where earnings needed to land. An estimate chosen for its effect on a target rather than because the evidence pointed there is not independent judgment, which brings the conduct within the Integrity and Objectivity Rule.