What are the ethical issues and who are the stakeholders?

You are chief financial officer of Camp Industries. Camp is the defendant in a $44 million class-action suit. The company’s legal counsel informally advises you that chances are remote that the company will emerge victorious in the lawsuit. Counsel feels the company will probably lose $30 million. You recall that a loss contingency should be accrued if a loss is probable and the amount can reasonably be estimated. A colleague points out that, in practice, accrual of a loss contingency for unsettled litigation is rare. After all, disclosure that management feels it is probable that the company will lose a specified dollar amount would be welcome ammunition for the opposing legal counsel. He suggests that a loss not be recorded until after the ultimate settlement has been reached. What do you think?   In your post discussing this case please include the following: Step 1:  State the facts Step 2: What are the ethical issues and who are the stakeholders? Step 3: What values are at stake? Step 4: What are the alternatives? Step 5: Evaluate the alternatives in terms of values Step 6: What are the consequences? Step 7: Make a decision. What should the company do?