Case 2-5
Blues Brothers
Assume it is December 31, the last day of the fiscal year, and you are an internal accountant for Saturday
Night Accessories, a privately-owned company run by the Blues Brothers, that provides personal services
to consumers. On that date a $1.2 million major contract for one year of services is received. You are
instructed by your supervisor who reports to the “Brothers” to record the full amount of the $1.2 million as
revenue on December 31. You know that management will receive a bonus for the boosted revenue and you
will receive recognition in an upcoming performance review.
QUESTIONS
1.What is the proper way to account for the revenue in this case? Why?
The $1.2 million contract of one year of services should be recorded as revenue in the year earned, the next
2.How might you go about convincing your supervisor of the proper accounting? That is, what
factors might enable you to get your point across and what are disablers that might prevent you
from achieving that result? Under what circumstances might you consider going to the Brothers
to discuss the matter?
Your superior would like the revenue booked on December 31 in the current fiscal year. The increased
revenue for the current year will increase bonuses and will help performance reviews. These are all short-
term views. Long-term views would note the revenue may be needed to make next year’s goals. Thus, the
As you review the short-term and long-term views of the recording of revenue, you need to find enablers
or people who support you doing the ethical action. It is helpful if you know an enabler in the company;
one who may act as the conscience of the company. However, it is also helpful to find personal enablers
who help you vocalize the ethical course of action and will not let you rationalize an unethical course of
action. These personal enablers can also be the ones that you would not want to disappoint by being
unethical and ending up on the front page of the paper. You need to plan on talking to your supervisor and
3.Under what circumstances might you consider going to the “Brothers” to discuss the matter?
In a private company, the “Brothers” may be hands-on acting as be the top executives of the company or
may be hands-off acting as a Board of Directors. You should go the “Brothers” only after going up the
chain of command in the company. If in discussing the accounting treatment of the revenue with your
supervisor and his boss you were told that the “Brothers” ordered the recording of revenue in the current