after read 2 paragraph of accounting ethic ethical dilemmas and responses Reply with your opinion whether you agree or disagree response your opinion with support
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. Response An extraordinary item is defined as \"an event or transaction that is considered abnormal, not related to ordinary company activities, and unlikely to recur in the foreseeable future. The reporting of an extraordinary item should be an extremely rare event\" (Accounting Tools, 2014). Since Hamilton Company has had product recalls in the past and are likely to have them in the future, this should not be treated as an extraordinary item, even if the its magnitude is greater than it has been in the past. Reporting this item as extraordinary would go against the AICPA's Code of Professional Conduct. If the CPA did not know that this should not be classified as an extraordinary item, he or she would not be exercising competence, which is presented in Section 56, Article V of the Code. If the CAP was aware that this was not an extraordinary item and tried to present it as such anyway, that would be against the accountant's integrity, which is presented in Section 55, Article III of the Code. 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. Response Even if the auditor follows generally accepted auditing standards, if there is a gap in their knowledge, they are behaving irresponsibly by performing that audit. This audit should be given to another CPA at the firm who has knowledge of government audit standards. If there is no CPA at the firm with this knowledge, the firm should reject the client. Conducting this audit without knowledge of any of the standards requires for the audit is irresponsible. In the AICPA Code of Professional Conduct, Section 56, Article V, it is clearly stated that a CPA must exhibit competence. If the CPA does not have knowledge of some of the standards required, the CPA is not exercising competence, which goes against the Code
