Back in her office, Sarah completes the estimate of the loss. If she follows accounting standards and records the entire projected loss for projects in progress, the amount will be substantial and very material to Frame Tec’s financial statements. She plans to tell the owners about the problem and to discuss the reporting requirements. She knows they’ll be disappointed. She’s worried that they will probably trust Jack’s judgment and not be overly concerned, content with thinking that future projects will be profitable. She expects the owners to encourage her not to worry and to report the loss at a later date, after future profitable projects are started.