Final Project: Solving Ethical Dilemmas in the Accounting Profession
Laurie Searing
ACC/260
July 25, 2010
Hope Piggee
Solving Ethical Dilemmas in the Accounting Profession
This dilemma in this ethical case is whether or not Daniel Potter (Dan), staff accountant for Baker Greenleaf accounting firm, should report unethical changes his immediate supervisor, Oliver Freeman, made to an audit report. The problem is that a large piece of real estate was valued on the balance sheet at $2 million. Dan had estimated the property at $100,000. Dan based his value estimate on the condition, location, and how long the property had been vacant. He approached the managers of the subsidiary with a proposal to write down the value of the property by
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He also gave a negative review of Dan’s performance that would void Dan the opportunity of an early promotion (Brooks, 2007).
This case has four primary stakeholders. Daniel Potter, the auditor, is interested in a long - term career with Baker Greenleaf and upholding strict ethical values. Oliver Freeman, Dan’s immediate supervisor, wants to keep his prominent position in the company and secure the client account wholly for Baker Greenleaf. Currently the accountant is shared with another firm. The third stakeholder is the subsidiary’s managers. They are aware of the misstatement on the value of the property in question, but they still want a clean opinion in the audit. Baker Greenleaf is the last stakeholder. They are interested in obtaining the client account for themselves as well as maintaining an exemplary reputation they have earned over the years (Brooks, 2007).
Dan realizes his name is on a clean opinion for that audit and is not comfortable with the actions that have been taken by Oliver Freeman. He should start with speaking to someone in-house about his concerns. His choices are someone in personnel, or his partner counselor. While he is uneasy about either of these options, he must choose one because Baker Greenleaf does not have an independent review board within their company as some other companies do. If his concerns are not dealt with appropriately in-house he will have to report the matter to the governing bodies of the accounting
With different industry definitions and viewpoints, fraud can be a tough issue for audit committee members to grasp for oversight purposes. The legal obligations of audit committee members have intensified because their standard duty of care and loyalty to the entity has increased in light of management fraud activities.
cognizant of the fact that the choices he makes can affect the price a buyer pays
Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the
This paper will explain the planning function of management in the culinary business, specifically Aramark a subcontractor for the Tucson Convention Center, which handles all the foodservice functions. Furthermore, this paper will describe the legal issues, ethics, and corporate social responsibility impact management planning has in this organization. Managers have to be aware of corporate social responsibility, legal and ethical issues when planning functions.
* Bo and Mo do explicitly say that it is up to Kevin to decide how to increase his productivity.
Imagine trusting your hard-earned money like your retirement savings to a financial adviser or Certified Public Accountants (CPA) only to lose it all in a fraudulent Ponzi scheme. In today’s world of business many organizations, financial planners and accountants are in the news due to the financial ethical breaches that have affected their customers, employees, and the general public. A CPA has to be responsible for their audits and take any punishments as a result of their mistakes, incompetence or illegal actions. CPAs are expected to have integrity in their work,
For any audit engagement APES 110 section 100.5 sets out five fundamental principles that all audit members must abide by (Gay & Simnett 2012, p. 86). They must act with integrity, objectivity and not allow bias. They need to ensure professional competence, confidentiality and comply with the relevant legislation (Gay & Simnett 2012, p. 86). As such one of the principle requirements for auditors is auditor independence from their clients. In Harris-Scarfe’s case, this was not possible because the deputy chairman used to be a partner at Price Waterhouse, the firm’s auditors (Buchanan 2004, p. 69).
The Bible and accounting have numerous similarities when it comes to ethics. First, let us take a look at the definition of ethics; “ethics are the beliefs that distinguish right from wrong. They are accepted standards of good and bad behavior” (Wild, p.8). Therefore when comparing the two we are able to distinguish certain verses in the bible, with the code of ethics in accounting that are recognized in the accounting industry or any industry at that.
If James serves to the Prairieland Bank, they maybe just follow their client’s financial systems. However in the long term period, this could affect their reputation as they did not giving any correction or recommendation of it. If other auditor especially for external auditor comes to audit their client’s financial reporting, they will think that James and their client are conflating with each other since the fraud make by client is clear and it is illegal with the financial regulations. So, in the future, no client will hire Ben and James as their auditor and indirectly their firm also will affected by his doing in which they will lost more client.
The autonomy of a competent patient is an issue not often debated in medical ethics. Refusal of unwanted treatment is a basic right, likened to the common law of battery, available to all people capable of a competent choice. These fundamental rules of medical ethics entered a completely new forum as medical technology developed highly effective life-sustaining care during the 20th century. Several watershed cases elucidated these emerging issues in the 1960’s and 70’s, none more effectively than that of Karen Ann Quinlan. Fundamentally, this case established that a once-competent patient without the possibility of recovery could have their autonomy exercised by a surrogate in regard to the
The structure of company Q is not currently formed to accommodate social responsibility or practice social ethics. Since the business is already in a heavily populated area and had to close down some of the stores due to high crime rates in those areas, maintaining a healthy relationship with the community in the area they are located is essential for the success of the business. The company has started to form a relationship with the community by listening to what the customers want and supplying the demand for those products. However, the chain is carrying all high margin products in all stores which may not suit the needs of those in lower income areas.
Integrity might cause problems in this case as the main persons in this organization are family members and there are also family members with high functions in the bank and JRW Realty with which Prefab has close business relations. Moreover, the members of the audit and compensation committee are not all independent of the firm and therefore, the likelihood of fraud or material misstatements in the financial statements is quite high. The profitability of the engagement to the auditor should be considered as well. Due to the extensive investigation the auditor has to do, especially due to the relationships between the people at the top management and the independence of the audit and compensation committee, the profitability might be a concern. Furthermore, from the analysis of the business risks of accepting the audit it can be concluded that there are several severe problem areas in which fraud or material misstatements in the financial statements can take place. At the Prefab Sprout Company the risk of fraud or material misstatements is considered to be very high and therefore, the engagement should not be accepted.
7. OVERVIEW AND ANALYSIS: A senior associate at Richard, Wood and Hulme LLP (RWH) was amazed at the speed with which the audit team for an important client for the firm was rapidly falling apart. Two members had just been fired presumably because they did not pass their chartered accounting qualification examination; team morale had become non-existent; there were difficulties in completing the engagement due to lack of preparation from both the RWH and the client; there was a question about the commitment of particular individuals; and with the audit falling behind schedule, the senior associate perceived an absence of strong leadership from the partners of the firm. The senior associate did not understand why the team had been so unfocused from the start of the engagement as prior years’ engagements had been quite successful. He was not sure how to proceed. What would he tell the client? What should he do to keep this audit on track and keep the team together?
witnesses also are included in the case. The primary issue in this case (drawn from actual
The next stakeholder is the clients themselves, the decision made on handling the discrepancies will affect the future of the company and its employees, as they could be out of work if the company closes. Another stakeholder is the accounting firm; If they decide to do the right thing it could cost them current and future revenue, again possibly affecting employees and their future earnings as well. The last stakeholder affected by the decision is Jane herself; she has her morals and reputation to consider as well earnings potential for the future.