Case - To Tell or Not to Tell: An Auditing Case in Ethical Decision Making and Conflict Resolution

Case Requirements -

1. Before you begin your research for the case, outline your initial reaction regarding whether your responsibilities as the auditor would be affected by your knowledge of the CFO's act.

2. As part of your duties as the auditor, should you contact the audit committee about the CFO's act? Support your answer by researching and discussing guidance provided in the authoritative literature. As a hint, first consider the general guidance provided by the AICPA Code of Professional Conduct (AICPA 1997) and Statement on Auditing Standards No. 54 (AICPA 1988). More specific guidance can be found by examining the Private Securities Litigation Reform Act (1995) and the Sarbanes-Oxley Act of 2002.

3. Address each of the following from the context of the impact on your financial statement audit work. Support each position by researching and discussing guidance provided by GAAS.

a. Does the illegal act increase the potential for fraud in the financial statements?

b. Assess the impact on the audit of the internal controls in the human resources department.

4. Write a memo to the audit partner informing her of your recommendation regarding Hogue & Company's resolution of this issue. Be sure to fully explain your reasoning and provide authoritative support for your proposed handling of this matter.

5. Does the fact that Bell Manufacturing is publicly traded affect your decision? If so, how?

6. To what degree was your initial reaction (question number one) based on your personal value set? Is your initial reaction consistent with GAAS and the requirement of the Code of Professional Conduct, Rule 102, to be objective, i.e., unbiased, as an auditor?

Attachment:- Case.rar