ACCT 642 Week 1 Discussion

ACCT 642 Week 1 Discussion | Liberty University | Assignment Help

Accounting Ethics Dilemmas (Forum 5)

NO. 1

A CPA has been engaged by a client to perform an audit in accordance with generally accepted auditing standards. The CPA has also been asked by the client to recruit and hire a chief accounting officer for a new branch location.

NO. 2

A CPA has a client who owes the CPA’s firm $15,000 for accounting services performed approximately eighteen months ago. At the conclusion of the current audit, the CPA is considering issuing the client an unqualified opinion inasmuch as the CPA has conducted the audit in accordance with generally accepted auditing standards.

NO. 3

A CPA is designing a block advertisement for the local newspaper to announce the creation of his new practice. In the advertisement he is considering identifying himself as a “specialist” in estate tax affairs and an “expert” in providing accounting services to small business.

NO. 4

A CPA has been asked by a client to evaluate various commercial service bureaus and recommend a particular service bureau for processing the client’s accounting records. Several partners in the CPA’s firm have a material interest in one of the service bureaus under consideration.

NO. 5

A CPA, a staff member, plans to submit her resume to another firm. In her resume, as an indication of her auditing experience, she is considering listing the names of several non-public companies for which she has performed audits.

NO. 6

A CPA, a sole practitioner, has acquired a practice from a retiring CPA. The CPA plans to retain the professional staff, which includes 5 CPAs. The CPA is considering identifying the new firm as “John Smith, CPA and Associates.”

NO. 7

Hamilton Company underwent a major product recall. This recall was primarily responsible for the company showing a significant loss on its income statement for the current year. The company has had product recalls before, but management believes the cost of the recall should be treated as an extraordinary item because of its magnitude. The CPA in charge of the audit concurs with management’s treatment concerning the product recall.

NO. 8

A CPA has been selected as auditor for a federally subsidized housing complex. The engagement contract required that such audits be in compliance with government audit standards as well as generally accepted auditing standards. The CPA is unfamiliar with the particular government audit requirements but conducts an otherwise satisfactory audit, in accordance with generally accepted auditing standards, and is considering issuing an unqualified report.

NO. 9

A CPA is considering organizing a corporation to provide billing services for local MDs. The corporation would be in a separate office. The CPA claims that this type of service does not constitute the practice of public accounting and therefore its operations are not bound by the institute’s professional ethics.

NO. 10

Freon Company has decided to deviate from a generally accepted accounting principle (GAAP) in publishing their financial statements because Freon believes that the statements would be misleading, if they followed GAAP. The CPA concurs in this departure from GAAP. In his report, the CPA is considering disclosing the following information in a middle paragraph: the deviation and the approximate effects thereof. Based upon these disclosures, the CPA thinks that an unqualified opinion would be appropriate.

NO. 11

A CPA’s client, Galaxy, performs payroll service for approximately forty companies including twelve of the CPA’s clients. The payroll services performed by Galaxy include all of the standard payroll operations along with payment, i.e. for each payroll period. Galaxy receives funds from each company to deposit in a special imprest bank account to cover the payroll checks issued to their employees. During the current audit of Galaxy, the CPA discovers that Galaxy’s liabilities exceed its assets by approximately $50,000. After discussing the problem with Galaxy, the CPA is considering notifying its clients who use Galaxy’s services to stop sending funds to Galaxy lest the cash disappear or become frozen due to legal or financial complications.

 Group Discussion Board Grading Rubric

100 Points