1.Do CPAs who provide accounting, taxation, and related services to small businesses have a responsibility to serve as the “moral conscience” of those clients? Explain.
Yes, CPAs who provide these types of services to small businesses should have the responsibility to serve as the “moral conscience” at times when they discover something is not proper or if the client wants to do something improper the CPA should consult with them and explain that it is fraudulent. The whole purpose is possessing a high degree of professional integrity with competence and reliability. The CPA’s reputation and career is on the line, so it is very important for them to act accordingly and ethical.
2.In a 1984 opinion handed down by the U.S. Supreme Court, Chief Justice Warren Burger noted that “the independent auditor assumes a public responsibility transcending any employment relationship with the client.” If this is true, do auditors have a moral or professional responsibility to turn in clients who are cheating on their taxes or violating other laws?
Yes, auditors should have a moral or professional responsibility to turn in clients who are cheating on their taxes or violating other laws. But, I believe they should only do it when they discover the act itself. They shouldn’t be searching to attempt to catch them. Also, if it happened to be a close relationship with a client and a discovery a fraud was detect. First, I would approach the client and attempt to have him try to reconcile and tell him that it is my duty to report this if he doesn’t stop. If it still continued, I would stop the business relationship and most likely have to report it.
3.Assume that you were Jess in the second hypothetical scenario presented in this case. How would you respond to your friend’s suggestion that you become a controlled informant for the IRS? Identify the parties that would be affected by your decisions and the obligations you would have to each.
If I was Jess in...