CASE 1

Gary is a forensic accountant and CPA who has practiced for nine years and has established an excellent reputation for the quality of his work and for his honesty. Two years ago he and another CPA, Sandy, merged their practices. Although Gary handles all forensic accounting engagements, Sandy performs attestation work.

Recently, Gary was approached by an attorney who would like to engage him to help prepare a case for litigation. The case involves a matter that requires the skill of a forensic accountant. Garys initial meeting went well and provided him with enough information to determine that he was qualified to perform the work needed by the attorney. Telling the attorney that he would think about whether to accept the engagement, he returned to his office.

After thinking about the potential engagement and checking his work calendar to determine whether he would be able to perform the engagement within the time period expected by the attorney, he decided that he would accept the engagement. Once he called the attorney to let her know that he would be happy to work on the case, she divulged the name of the party involved in the litigation. Gary recognized the name immediately. It was his wifes brother-in-law (the husband of the sister of Garys wife).

Required

a. Are there any threats that might operate to affect Garys compliance with the code and what code rule (or rules) should Gary consult before performing work on the engagement?

b. Under what circumstances, if any, may Gary accept the engagement?

c. Are there any safeguards that Gary can implement to reduce any threats that exist?

CASE 2

You are a well-known forensic accounting expert. You have been engaged by Wilson Isquierda, a nationally- renowned attorney who represents Tom Wilco, a medical doctor who owned many pain clinics in Florida until he was charged with Medicare fraud, mail fraud, and money laundering in a federal indictment. Wilson is very good at what he does and knows the federal prosecutors well, as well as the actions and items needed to win cases. He hires you to build a forensic accounting case to show that Tom Wilcos business was all legal and proper. At the beginning, you caution Isquierda to the effect that your findings might not be helpful to his clients case. He told you not to worry about it; you were totally free to seek the truth.

In conducting your investigation, your review of medical claim records revealed many claims in which Dr.Wilco billed insurance companies for visits that never took place. You were very disappointed with such a finding because you knew that you had to quickly break the bad news to Isquierda and withdraw from the engagement.

Before you could even call Isquierda, a shady-looking man met you in the parking garage next to your office. The man walked straight up to you and pressed a shiny revolver into your forehead, right between your eyes.

The man spoke, In the Wilco case, youll say that you found nothing wrong. If you dont do exactly as I say, I promise you will be very sorry.

The experience shook you terribly and you did not have any idea of what to do. You went and told your story to Isquierda, but to your surprise Isquierda seemed completely undisturbed by your story, as though it was something he had been expecting to hear.

You have to understand, said Isquierda. I dont always represent the cleanest clients.

Isquierda then told you that your best bet would be just to write the report the way the gunman instructed.

Its not worth getting killed over, he said. It wont really matter because we will plea bargain the case. We always plea bargain the case. Only dumb politicians go to trial, so your report will never see the light of day.

Required

What should you do? Explain.