Case # 2-5!
1. The $1.2 million service fees for one year of future services should be a liability until
the service is performed. This is considered as deferred revenue on the current
liabilities (1 year or less) of the balance sheet.!
2. I would t
AICPA Code of Professional
Questions for Consideration
1. What are the ethical obligations of CPAs
under the AICPA code?
2. What is the role of independence in an
audit and how can CPAs manage the
threats that exist to audit independence
Ethics Ch. 8
International Financial Reporting:
Ethics and Corporate Governance
Cultural values/differences in auditing
Secrecy (China) vs. transparency (U.S.)
Chinese government is major stockholder in most
Case 4-10 Independence Violations at PWC
Cassandra Jacob: 0, 4
In commenting on the findings in the consultants report (in Part I of the Case Study), the then-chief accountant
of the SEC, Lynn E. Turner, said, This report is a sobering reminder that accou
3.6 Case study
Cassandra Jacob: 1,9
Assume Gordon made a strong case that the accounting did not comply with GAAP but his
superiors said that the decisions already made were final. They never offered an explanation.
What would you do next if you were Benn