If this is simply a compilation rather than a review, do Heather and the CPA firm face ethical issues? What Are the Ethics of the Alternatives? Sandy, the part-time bookkeeper "Buzz" Thompson, the owner/manager Heather Hunt, the senior on the Job The partner in charge of the Job for the CPA firm The CPA firm The IRS and the state tax agency Taxpayers Actual or potential lenders of the company For each alternative, do the net benefits exceed the net costs to all primary stakeholders? How would costs be measured in this scenario? Ask questions based on a "rights" approach:
What Are the Possible Alternatives? Whose rights are violated in each possible alternative? What does each stakeholder have the right to expect? Ask questions based on a "Justice" approach: Ask students to identify alternatives available to both Sandy and Heather. For each alternative, who benefits and who loses? Who Are the Primary Stakeholders? Ask questions based on the "Utilitarian" approach: For each decision to be made by those involved, which alternatives distribute the benefits and burdens most fairly among the stakeholders? Sandys alternatives: What Are the Practical Constraints?
Stay with the Job but insist on changes in revenue reporting. The legal ramifications of any actions taken must be considered by Sandy, Heather, mand the CPA firm management. Resign from the position. Do nothing--keep the Job Other The guidance provided by the appropriate professional standards should be taken into account by the CPAs, Heather and the partner(s). 10029, and AR 100. 39-. 41 the AICPA Heather''s alternatives: 01992 Arthur Andersen & Co, SC. All rights reserved. Page 1 of 2 Professional Standards. What effect does materiality have on the decision-making process y the CPAs?
What actions should Heather take? What alternatives would you choose if you were in this situation? Why? Sandy needs the Job badly. What should the CPA firm do? Why? Heather must consider the effect of her actions on her career. What should Sandy do? Why? of retention of this client. What ethical theories (Rights, Justice, Utilitarian, etc. ) are applicable to this situation? What advice should Heather give Sandy, if any? Should the actions differ depending on whether the engagement is for a compilation or for a review? What Actions Should Be Taken? Page 2 of 2
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