4 Indicate the four most important items and their relative order of importance

4 indicate the four most important items and their

This preview shows page 14 - 17 out of 22 pages.

4. Indicate the four most important items and their relative order of importance to your decision by placing their item numbers in the blanks labeled ‘most important,’ ‘second most important,’ ‘third most important’ and ‘fourth most important.’ 50 Gregory Liyanarachchi and Chris Newdick
Image of page 14
Scenario 1: the opinion Susan Bonnet, CA, served as the partner-in-charge of the consulting team that installed the computer- ized accounting system for Midwest Sales, a publicly held company. Midwest has been a client of her national CA firm for 15 years. During this period, Midwest has experienced rapid growth, and is now planning a $15 million stock offering. Keith Pasket, an audit partner, is nearing comple- tion of the procedures in the audit program for Midwest. Although the audit has found no discrep- ancies in the account data and financial reports, several critical weaknesses were noted in the internal control structure of the computerized accounting system. Mr. Pasket does not want to give an unqualified opinion unless the audit scope is expanded. Ms. Bonnet, who has devoted many hours to the development of the computerized accounting sys- tem, is very defensive of the system and assures Mr. Pasket that everything is under control. The client is in agreement with Ms. Bonnet and is unwilling to pay for an expanded audit. Should Pasket give an unqualified opinion? (Please tick the appropriate space). Should give _____ Cannot decide _____ Should not give _____ Importance (Please indicate the importance of each of these considerations in making your decision): Great Much Some Little No 1. Any problems are the fault of the CA firm and the financial report of Midwest should not be jeopardized. 2. Whether expansion of scope is the only alternative under GAAP. 3. Midwest’s goals should be placed ahead of differences concerning the type of audit opinion. 4. Whether Pasket is biased because the work was completed by Ms Bonnet. 5. Whether Pasket knows about the anticipated stock offering. 6. Whether Midwest will be treated the same as other clients in similar situations. 7. Whether internal control concerns can be solved solely with a management letter. 8. Whether rendering an unqualified opinion will conflict with Pasket’s personal sense of integrity. 9. Whether consulting revenues are dominant within the CA firm. 10. How would the stockholders’ interest be best served? 11. Whether performing critical accounting activities on the computer versus manually violates GAAP. 12. Whether the CA firm’s obligation to the client conflicts with their obligation to the shareholders. From the list of considerations above, select the four most important in making your decision: Most important #_____ Third most important #_____ Second most important #_____ Fourth most important #_____ The Impact of Moral Reasoning and Retaliation on Whistle-Blowing 51
Image of page 15
Scenario 2: bankruptcy Fun Bicycle, a recently formed company, has approached Atop Metals, a company with $8 million in sales, for a line of credit for the purpose of the supply of tube steel for the manufacture of bicycles.
Image of page 16
Image of page 17

You've reached the end of your free preview.

Want to read all 22 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes