| Course | AC504 Ethical Issues in Business and Accounting |
|---|---|
| Unit | Unit 5 |
| Paper type | Case analysis |
| Length | About 750 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 5
Seventy Percent to Programs Before the Auditors Arrive: A Unit 5 Case Analysis at a Youth-Mentoring Nonprofit
[Student Name]
Purdue University Global
AC504: Ethical Issues in Business and Accounting
Unit 5 Case Analysis
[Instructor Name]
[Date]
The nonprofit, its staff, the foundation and every figure are composite; the standards update, code and textbook cited are real.
Facts
The organization spends $14,000,000 a year mentoring young people in three cities. On the draft statements, program services are $9,940,000, or 71 percent of total expenses. A family foundation's grant of $1,200,000 funds 30 mentor positions and states that the foundation expects grantees to spend at least 75 percent of expenses on programs. Renewal is decided in May.
Salaries for the executive director, the development director and the finance staff total $820,000 and are reported as management and general or fundraising. The finance director wants 70 percent of them, $574,000, reclassified to program services, which would lift the ratio to 75.1 percent. Last year's time study, the only evidence of how these people spend their time, shows the executive director spending about 20 percent of her hours on program work, mainly mentor training and site visits, and the others close to none.
Issues
Is the proposed allocation a reasonable accounting judgment or a misstatement? What does the senior accountant owe, and to whom? What should she do?
Standards
Not-for-profit entities must report expenses by function and disclose the methods used to allocate costs among programs and support functions, and those methods must be reasonable and applied consistently (Financial Accounting Standards Board, 2016). An allocation is supposed to reflect where effort and cost actually go. The professional code bars members in business from knowingly misrepresenting facts or subordinating their judgment to others (American Institute of Certified Public Accountants, 2014).
Analysis
The finance director's reasons are not foolish. The executive director does spend some time on programs; leadership arguably supports every mentor; and losing the grant would cost 30 mentor positions, which hurts the young people the organization serves. A ratio target set by a funder can push organizations toward underinvesting in the management that makes programs work.
But the allocation must rest on evidence. The time study supports moving about 20 percent of the executive director's salary, perhaps $36,000 of her $180,000, not 70 percent of three people's pay. Moving $574,000 would describe the organization's effort inaccurately to the foundation, to other donors who read the statements and to the auditors. The purpose of the change, to clear a funder's line, is the clearest sign that it is not a judgment about where effort goes.
The kind thing and the honest thing point in opposite directions here only if the foundation is deceived, and a renewal won by misstating where money goes protects the 30 mentor positions for one year at the cost of the organization's credibility with every reader of its statements.
Who Reads the Ratio
The program ratio is read by more people than the foundation. Other donors compare it across charities when deciding where to give. Rating services publish it. The board uses it to judge whether administrative costs are under control. Each of these readers assumes the allocation reflects how staff actually spend their time. A reclassification made to clear one funder's line would mislead all of them, and it would also hide from the board a real question worth discussing: whether a 71 percent ratio reflects underinvestment in programs or a reasonable level of management for an organization operating in three cities. That conversation is more useful than a number moved to avoid it.
Options
Comply. Easiest, and probably undetected this year. It misstates the functional expense statement by about $538,000 and makes the senior accountant responsible for numbers she knows are wrong.
Comply partly. Move the $36,000 the time study supports. Honest, but leaves the ratio at about 71.3 percent.
Decline and propose an alternative. Record only what the evidence supports, update the time study this quarter to capture any program work the old one missed, and help the executive director write to the foundation explaining the ratio, the investment in management it reflects and the outcomes per mentor.
Decision
She declines the reclassification and takes the third option. She tells the finance director in writing that she can move the supported amount and will help prepare the foundation letter. If the finance director insists, she raises the matter with the audit committee chair, following the escalation path her professional statement recommends (Mintz & Morris, 2020).
References
American Institute of Certified Public Accountants. (2014). AICPA code of professional conduct. AICPA.
Financial Accounting Standards Board. (2016). Not-for-profit entities (Topic 958): Presentation of financial statements of not-for-profit entities (Accounting Standards Update No. 2016-14). FASB.
Mintz, S. M., & Morris, R. E. (2020). Ethical obligations and decision making in accounting: Text and cases (5th ed.). McGraw Hill.
AC504 Unit 5 instructions, in plain terms
The fifth AC504 unit asks for a full case analysis in a standard format: facts, issues, standards, analysis, options and decision. Give the facts precisely, including the figures that make the pressure real and the evidence available. Frame the issues as questions. State the accounting standards and professional rules that apply. In the analysis, present the strongest version of the argument for complying before answering it, and identify every group that reads or relies on the figure in question. Offer three or more realistic courses of action, partial compliance among them, and say what each would lead to. Choose one, explain why, and explain the steps you would take to put it into effect, including what you will do if the person insists. Write for a reader who may sympathize with the instruction. Cite the not-for-profit presentation standard, the professional code and an ethics text in APA 7.
How the AC 504 Unit 5 example is put together
The sample's facts give total expenses of $14,000,000, program services of $9,940,000, the foundation's 75 percent expectation and the $574,000 reclassification, with a time study supporting only about 20 percent of the executive director's time. Issues are framed as three questions. Standards cover functional expense reporting and the code. The analysis credits the finance director's concern for the 30 mentor positions, then shows the evidence supports about $36,000. The highlighted sentence answers the kindness argument. A section lists every reader of the ratio. Options compare compliance, partial compliance and a declined reclassification with a new time study and a letter to the foundation, and the decision includes an escalation step.
AC504 Unit 5 rubric: what earns full points
Case analyses in AC504 earn points for complete structure and fair reasoning. Graders check that facts are specific and that the accounting standard on functional expenses is applied correctly, including the need for a reasonable, consistent and disclosed allocation method. The rubric rewards analyses that take the complying argument seriously and answer it on evidence rather than dismissing it. Identifying all users of the figure shows understanding of why misstatement matters. Options should be realistic and their consequences stated. A decision with an implementation plan and an escalation path earns the most credit. Analyses that call the finance director dishonest, or that treat the ratio as unimportant, lose points. APA 7 citations support the work.
AC504 Unit 5 help from the desk
Weak Unit 5 analyses skip the evidence and argue from principle alone, so the reader never learns that a time study exists. Others treat functional reclassification as harmless because total expenses do not change. The finance director's motive, saving mentor positions, is ignored or mocked. Only two options are offered, comply or refuse, missing the honest alternatives. The decision has no plan for what happens if the finance director insists. Other readers of the ratio, such as donors and rating services, are left out. If your section's case involves a different nonprofit judgment, such as donor restrictions or in-kind valuation, a writer can build the analysis around those facts.
Get an AC504 Unit 5 example written to your instructions
Outline the Unit 5 instruction, who gave it, what it would change in the records and what refusing might cost, then attach the rubric. The analysis gives the supervisor's reasoning its due, tests materiality first, follows the escalation steps your code prescribes and ends on a dated sequence, in 24-48h. The first case analysis is free. 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 5 questions, answered
Is shifting expenses between functions really a misstatement if totals don't change?
Often, yes. Nonprofit statements present expenses by function, and donors, funders and rating services read the program share as a measure of how contributions are used. An allocation that contradicts the organization's own time records misstates that presentation. The AC504 example argues materiality from those users' decisions, which is the test the Code's interpretation asks the accountant to apply.
What does the Code expect when a supervisor insists?
For members in business, the subordination-of-judgment interpretation describes a sequence: decide whether a material misstatement would result, discuss it with the supervisor, take it to higher management or those charged with governance if unresolved, document the matter, and consider whether to stay in the role and whether any duty runs to outside parties. The example follows that order.
Why offer the finance director a new time study?
Because her underlying claim, that program time is undercounted, might be true, and a refusal that ignores it leaves her no way forward except defiance. A properly designed time study tests the claim; if it supports a higher allocation, the change is legitimate and disclosed. The example treats that offer as part of the ethical answer, not a concession.
Where can I find a free AC504 Unit 5 sample paper?
This page holds a full AC504 Unit 5 case analysis of a pressured program-ratio reclassification at a composite youth-mentoring nonprofit, with facts, issues, standards, options, a decision and APA 7 references.
How much of the salaries could honestly be moved to programs?
Only what the time study supports, about 20 percent of the executive director's $180,000, or roughly $36,000. That lifts the ratio to about 71.3 percent, well short of the 75 percent the finance director wanted.