a. This presents an ethical dilemma for Barbara, because she is faced with the decision as to what actions or behavior would be appropriate for this situation. Barbara’s ethical dilemma necessitates deciding whether she should communicate her findings to the client for adjustments or to disregard them as instructed by Jack.
b. Six-Step Approach:
1.| Relevant Facts:|
| * The accounting firm for which both Barbara Whitley and Jack Bean work for is Green, Thresher & Co., CPAs. * Jack was a senior auditor, while Barbara had been an auditor for less than a year. * In February 2011, Barbara was on the team conducting an audit on Delancey Fabrics. * The CPA firm was already on a time crunch to complete its audit of Delancey. * In regards to Delancey’s property area, Barbara was to sample all items over $20,000, plus a judgmental sample of smaller items. * Barbara interpreted a judgmental sample to include fifty samples, because she could not find Jack for his interpretation of an appropriate size. * She did not find any misstatements in any of the items over $20,000, but her sample of fifty smaller items contained numerous irregularities that were significant when added together. * It was after the fact when she learned that five to ten items was considered sufficient enough for the random sample. * Jack’s response to Barbara’s findings was to disregard, and literally discard her findings. His exact response was “Don’t worry, it’s not material anyway. You just forget it; it’s my concern, not yours.” | | |
2.| Ethical Issues:|
| * Is it ethical for Barbara to disregard her audit findings of misstatements, as well as the schedules that support her findings? | | |
3.| Who is affected and how?:|
| Who is affected?| | How?|
Barbara Whitley| | * Being asked to violate responsibility as a professional * Integrity and...