1. Is David Robinson suggested compromise appropriate? Why or why not?
2. Do you believe that Zachariah Crabtree is a person of integrity? What about David Robinson? Defend both of your answers. Does Robinson have an impropriate relationship with Crabtree? Explain.
3. Identify the primary audit objectives for client’s year-end discretionary expense accruals. Is it permissible for companies to overstate period-ending expense accruals to make their financial statements more “conservative”?
4. Discuss the scope and nature of an auditor’s responsibilities during a review of client’s quarterly financial statements.
The American Institute of Certified Public Accountants is a professional organization responsible for developing professional accounting ethical values. The AICPA requires professional accountants to act responsibly when engaging in accounting services and reviewing sensitive financial information. Accountants should always exercise sound moral judgment in all accounting activities. Accountants have responsibility to provide clients with professional services while presenting a truthful and accurate assessment of a company financial health to the general public. I think David first needs to determine the reasonableness of the amounts previously recorded by Crabtree. According to AU Section 312A, in determining the amount of the likely misstatements to be aggregated, the auditor considers the “closest reasonable estimate” which may be a range of acceptable amounts or a point estimate, if that is a better estimate than any other amount. Moreover, the Rule 102 Integrity and Objectivity states that the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others. I think that David Robinson suggested compromise was an appropriate and violated...