Brad’s suggestion to extend the life of the aircraft from an original estimate of 15 years to 20 or 25 years goes against financial policies in accounting systems. Studies on the fields of accounting reveal that the preparation of accounting information is the main duty of accountants. The application of accurate financial data is the only way through which professionals have the capacity to see the framework of a business and develop strategies for the improvement of areas of weakness. Extending the life of the aircraft from an original estimate of 15 years to 20 or 25 distorts financial data and tilts the balance sheet in favor of BluJay Aviation’s accountants at the expense of shareholders and industry players.
According to Ingram and Albright (2006), “financial data is the language of business, before using financial accounting information to your advantage, you must first be sure it is correct.” This calls for accuracy in accounting procedures and data management. Extending the life of the aircraft from an original estimate of 15 years to 20 or 25 is unethical and its premise cannot be ascertained within accounting standards. Whereas Brad posits that 15 years for the aircraft was an estimate, messing around with the financial statements and changing numbers may become more complex in the event that 20 or 25 years are over-estimates.
Such a situation should not be allowed to happen because they distort the companies’ true financial position income statement. These form important data that shareholders and potential investors look into when making investment decisions. On the other hand, Porter and Norton (2010) argue, “inaccurate reports are rendered useless because it is useless to derive conclusions from something that is erroneous; this is a situation that cannot be allowed to happen as it can ruin the very existence of a business.” An analysis of the above case would indicate an inability to adhere to accounting regulations. The operational measures should enhance the drivers of future financial performances. The capacity to demonstrate the true financial position and success of BlueJay is important and constitutes an attribute of handling the accounting fundamentals within the set ethical guidelines. Consequently, accountants at Bluejay should realize that performance measurement should not only go beyond the presentation of financial figures but should also articulate the drivers of future performance. This point appears to have been ignored in the proposal to have the life of the aircraft extended by 5 to 10 years.
The internal business perspective captured by accounting procedures should address issues relating to how business processes are adopted within the needs of the investors and the shareholders (Needles, Powers, and Crosson, 2010). This should be implemented through the creation of an internal accounting infrastructure that supports the accounting processing of data. Such a process would demonstrate the true nature of the overall businesses performance at BlueJay Aviation. Whereas the focus should ideally center on better service delivery and reflect the company’s value attachment to the customers, the role of shareholders and industry players must form the focus of the accounting department.
Ideally, Brad and Wren should embrace strategies that ensure that the financial statements are precise, accurate and take cognizance of the fact that financial data is the language for businesses. Developing a financially sound business operation calls for analyzing, interpreting and presenting accurate financial statements.
Ingram, R.W. and Albright, T.L. (2006). Financial accounting: information for decisions. NY: Cengage Learning
Needles, B.E., Powers, M. and Crosson, S.V. (2010). Financial and Managerial Accounting. London: Cengage Learning.
Porter, G. A., and Norton, C. (2010). Using Financial Accounting Information: The Alternative to Debits and Credits. Sidney: Cengage Learning.