Neka Kiser, vice president of operations for Mountain National Bank, has instructed the bank’s computer programmer to use a 365-day year to compute interest on depository accounts (payables). Neka also instructed the programmer to use a 360-day year to compute interest on loans (receivables).
Discuss whether Neka is behaving in a professional manner.
My Response: 5 Sep 08 10:09 AM MST
I wanted to provide a definition of a deposit account. I went to the web in search of this definition, “A deposit account is a current account at a banking institution that allows money to be deposited and withdrawn by the account holder, with the transactions and resulting balance being recorded on the bank's books. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited.
(http://en.wikipedia.org/wiki/Deposit_account, reveiwed, September 4, 2008)
To increase the days that the intrest is compute for the deposit account would increase the interest that the bank could collect from the consumer. This is not ethical and if customers looked at their bank statement and could analize this amount that must be disclosed then there would be complaints. This complaint would also be sent to the regulations that oversee the banking industry. The order that Neka gave the programer to compute the loans (receivables) for a 360 day year sends a clear message that Neka was aware of the correct thing to do and chose not to for the payables. Neka is acting in a very unprofessional manner and is asking someone else to create something in terms of computer programming that is unethical as well.The computations of the receivables is in order for computing at 360 days per our text. “ The interest rate on notes is normally stated in terms of a year, reagardlessof the actual period involved.”
(Warren, Reeve, and Duchac,. 2007)
http://en.wikipedia.org/wiki/Deposit_account reveiwed, September 4, 2008)Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
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