06 Feb 4) What should the firm do regar

ACC522 Advanced Audit Issues

Unit 7 Assignment

Case Study: Missing Receipts

Student Name: _____________________________________

Prepare a presentation that addresses the issues in the case below

Address your presentation to accounting students studying the cases as a lesson in ethics, and you are the instructor.

Be creative with your presentation!

Case Study – The Case of Missing Receipts

Amy and Jane are newly minted CPAs and are currently assigned as external auditors as part of the audit team from XYZ, LLP responsible for the financial audit of the school district of Hamptons located in the state of New York for FYE 2016. Amy and Jane are experiencing major difficulties tracing the original documentation for travel and documentation reimbursement claims made by the top business manager of the district. The manager is aware of the concerns of Amy and Jane and approached them about it. The following conversation took place:

Manager: I have spent an inordinate amount of time requesting for copies of these receipts from the hotel where I stayed. Unfortunately, the vendor informed me that my receipts are no longer available for them to reproduce a copy of.

Amy: How about your credit card statement that shows you paid for these amounts? Could you produce those?

Manager: I did not use a credit card. I paid for them in cash.

Jane: How about a copy of the reservations that you made? Nowadays, we often make reservations online. You may be able to retrieve this information from your email archive.

Manager: I delete all my emails after 3 months. I don’t have any of this.

Amy: Is there any other proof that you can provide to substantiate this reimbursement?

Manager: Girls, what can I tell you? I can’t produce what I don’t have and others are unwilling to provide me with. What do you want me to do?

Instructions: To fully address the questions below, use the following pointers as your guide:

1) Analyze the ethical question or dilemma

2) Consider the stakeholders that are likely to be affected by these actions.

3) Analyze Alternatives and/or consequences

4) Defend a viewpoint

5) Discuss core beliefs, its origins and relationship to the accounting profession

Questions:

1) Amy and Jane are CPAs and members of the AICPA. What ethical standards in the Code of Professional Conduct should guide them in dealing with the dilemma presented by the manager here?

2) Should Amy and Jane report these findings to their audit manager?

3) The manager is very friendly and personable. During the course of the audit, he has often purchased lunch for the audit team even if the team refused to do under the guise that this is a treat for everyone. Amy and Jane are afraid that reporting this situation may have a negative impact on the manager’s job. Should they be concerned about this?

4) What should the firm do regarding this information? What are the proper procedures that they should observe?

5) Besides the missing receipts, would the actions of the business manager here prompt you to consider performing additional tests? Why or why not?