Accounting Case Study Example

ACCOUNTING MINICASE: ACCT – 10 TEACHING NOTES BUSINESS ETHICS PROGRAM Cash in Hand Teaching Notes What Are the Relevant Facts? 2. 4. 5. Talk to Sandy but no one else. Report Sandy’s observations/concerns to her manager and/or partner If engagement is dropped, take no further action. 6. If engagement is retained: Take no further action. Document disagreement with the partner’s decision in the work papers. Ask to be removed from the engagement. Resign her position. 7. This is the first time that Fashion First has used a CPA firm.

Decline to counsel Sandy. 3. ve handled all record-keeping and tax reporting functions up to the present. Provide advice to Sandy about her alternatives (see above). Heather’s new client is an incorporated retail outlet, Fashion First. Heather Hunt is a senior in a small, regional CPA firm. Report situation to the media?””blow the whistle. ” The CPA firm has been engaged to prepare financial statements and handle tax returns. What Are the Ethical Issues? Questionable reporting of cash revenue by the client.

What are the issues emerging from this apparent co-mingling of corporate and personal assets?

If this is simply a compilation rather than a review, do Heather and the CPA firm face ethical issues? What Are the Ethics of the Alternatives? Sandy, the part-time bookkeeper “Buzz” Thompson, the owner/manager Heather Hunt, the senior on the Job The partner in charge of the Job for the CPA firm The CPA firm The IRS and the state tax agency Taxpayers Actual or potential lenders of the company For each alternative, do the net benefits exceed the net costs to all primary stakeholders? How would costs be measured in this scenario? Ask questions based on a “rights” approach:

Ethical Issues In Accounting Case Study

What Are the Possible Alternatives? Whose rights are violated in each possible alternative? What does each stakeholder have the right to expect? Ask questions based on a “Justice” approach: Ask students to identify alternatives available to both Sandy and Heather.

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For each alternative, who benefits and who loses? Who Are the Primary Stakeholders? Ask questions based on the “Utilitarian” approach: For each decision to be made by those involved, which alternatives distribute the benefits and burdens most fairly among the stakeholders? Sandys alternatives: What Are the Practical Constraints?

Stay with the Job but insist on changes in revenue reporting. The legal ramifications of any actions taken must be considered by Sandy, Heather, mand the CPA firm management. Resign from the position. Do nothing–keep the Job Other The guidance provided by the appropriate professional standards should be taken into account by the CPAs, Heather and the partner(s). 10029, and AR 100. 39-. 41 the AICPA Heather’s alternatives: 01992 Arthur Andersen & Co, SC. All rights reserved. Page 1 of 2 Professional Standards. What effect does materiality have on the decision-making process y the CPAs?

What actions should Heather take? What alternatives would you choose if you were in this situation? Why? Sandy needs the Job badly. What should the CPA firm do? Why? Heather must consider the effect of her actions on her career. What should Sandy do? Why? of retention of this client. What ethical theories (Rights, Justice, Utilitarian, etc. ) are applicable to this situation? What advice should Heather give Sandy, if any? Should the actions differ depending on whether the engagement is for a compilation or for a review? What Actions Should Be Taken? Page 2 of 2