Question
As the auditor for XYZ Company, you discover that a material sale ($500,000 sales revenue and $300,000 cost of goods sold) was made to a
As the auditor for XYZ Company, you discover that a material sale ($500,000 sales revenue and $300,000 cost of goods sold) was made to a customer this year. Because of poor internal accounting controls, the sale was never recorded. Your client makes a management decision not to bill the customer because such a long time has passed since the shipment was made. You determine, to the best of your ability, that the sale was not fraudulent. Using the framework for ethical decision making, determine whether the auditor should require either a recording or a disclosure of the sales transaction. Explain your reasoning throughout the steps of the framework.
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