Discussion
Respond to the following question:
Loretta Smith, president and owner of Custom Enterprises, applied for a $250,000 loan from City National Bank. The bank requested financial statements from Custom Enterprises as a basis for granting the loan. Loretta has told her accountant to provide the bank with a balance sheet. Loretta has decided to omit the other financial statements because there was a net loss during the past year.
Is Loretta behaving in a professional manner by omitting some of the financial statements? Why or why not? If you were Loretta’s accountant, what are two to three risks you should make Loretta aware of?
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