Auditin 54 Ethics.docx - Ethical Dilemma A Conflict in...

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Ethical Dilemma: A Conflict in Independence The ultimatum issued by Software Technology Corp (STC) requiring that their accounting firm approve of the accounting revenue recognition transition was unethical because it would interfere with the accounting firm’s ability to remain independent when auditing financial statements in the future. Charles Hutton was the chosen agent to represent the accounting firm on the revenue recognition changes that Edvid, Inc’s CFO was proposing for immediate transition. Prior to the meeting, Charles Hutton had become aware of Edvid’s desire to issue common stock to raise capital for a national expansion project (pg 48), and the project had been stalled due to the investment bankers desire to see audited financial reports before moving forward. Accepting STC’s ultimatum proposed additional ethical concerns because the accounting firm had already executed due professional care when Charles Hutton advised the CFO of Edvid that the could not proceed on their proposals because: SFAS No. 48 was not applicable to Edvid because they were providing a rental service that temporarily transferred viewership rights to their customers. Edvid also required
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