As David Robinson works his way through the large, festive crowd, he keeps bumping into people he knows. All the while, Robinson is hoping that he will avoid the one person he doesn't want to meet face to face.
Belot Enterprises' several hundred employees and their family members are celebrating the Fourth of July with a corporate picnic. For the occasion, the company had reserved a municipal park perched on the bank of the Mississippi River in a Minneapolis suburb. The corporate picnic actually serves two purposes. In addition to celebrating the Fourth of July, Belot's employees are marking the end of the successful corporate-wide "Nail the Number" campaign.
The campaign was the brainchild of Kyle Allen, Belot's chief operating officer (COO), who joined the company six months ago. Allen was handpicked for the COO position by the top management of Helterbrand Associates, Belot's parent company.
Helterbrand is a large, publicly-owned conglomerate with five wholly-owned subsidiaries that operate in five diverse industries.
Belot, a consumer products company, accounts for approximately one-third of Helterbrand's annual revenues and consolidated assets. During the previous several years, however, Belot has never accounted for more than 10 percent of Helterbrand's consolidated operating income. Two decades ago, Belot was the flagship of the Helterbrand corporate family. Declining profit margins in Belot's mature and intensely competitive industry have caused the company's profitability to gradually erode despite low but persistent growth in its annual revenues.
Allen, a 38-year-old Harvard MBA who established himself as a corporate turnaround specialist in the automotive supplies industry, was hired to reinvigorate Belot. After spending several weeks studying all facets of Belot's operations, Allen organized the Nail the Number campaign for the company's second quarter-April 1 through June 30. The goal of the campaign was to increase Belot's year-over-year quarterly operating income by 100 percent. Although that goal seemed impressive, it was not earthshaking since the company had earned a very modest, even by recent historical standards, operating income during the previous year's second quarter.
The tactics employed by Allen during the three-month campaign were also not earthshaking. They included focusing Belot's marketing efforts on products with relatively high profit margins, incentive-based compensation programs for the company's sales staff, and a variety of corporate-wide cost-cutting initiatives.
When David Robinson learned of the details of the Nail the Number campaign, he was not impressed. In his mind, the company should have implemented each of those strategic measures long ago. Then again, as a member of Belot's audit engagement team, Robinson recognized that his responsibilities did not include openly critiquing corporate management or its policies.

Questions
1. Is David Robinson's suggested compromise appropriate? Why or why not?
2. Do you believe that Zachariah Crabtree is a person of integrity? What about David Robinson? Defend both of your answers. Does Robinson have an inappropriate relationship with Crabtree? Explain.
3. Identify the primary audit objectives for a client's year-end discretionary expense accruals. Is it permissible for companies to overstate period-ending expense accruals to make their financial statements more "conservative"?
4. Discuss the scope and nature of an auditor's responsibilities during a review of a client's quarterly financial statements.