Cases1. Sam Johnson is a new partner in Wilkerson . James , and Flores , an accounting firm . HE is incharge of an audit for Zappo Electronics . which manufactures circuit board parts for majorInternational electronics companies .Zappo's main asset is it's inventory . which is listed on the books at $742. 000. After doing acomplete audit of the inventory . however , Sam discovered that nearly half of it is obsoleteand worthless . HE reported to the partner in charge that the inventory needs to be writtendown by $350. 000 before the firm could sign off on a clear opinion .The partner in charge meets with Zappo's CEO who argues strongly against any write- downof inventories .* We'll find a market for every last item in the inventory , " said the CEO ."It might take sometime . but we'll sell everything ."The partner in charge tried to disagree , but the CEO was adamant . " If you make us writedown the inventory that much , we won't be able to get any more bank loans , and that will putus out of business . "The senior partner and the CEO haggled back and forth until they finally agreed to a$125.000 write - down .`* That will keep our credit intact ," said the CEOThe next day . Sam met with the senior partner ." We've agreed to a $125. 000 write- down," said the senior partner to Sam ." The company hasalready made the adjustment , and now I want you to sign the audit report without any*qualifications or modifications . This is a good client , and I'm not going to let us lose It oversomething stupid like this . " "Sam objected . His analysis of the inventory was solid , and he did not understand how anhonest auditor could simply negotiate a write - off .*" Forget about it ," said the partner in charge ." The company is financially sound , so whatdoes it matter ? Where's our liability ? WE don't have to worry about getting sued unless the*company fails . and you know it isn't going to fail . It's overflowing with military contracts . Iwish I owned part of the company myself. "" But that's not how' we're supposed to do auditing , " said Sam ." Look, " said the senior partner ." Who's to say for sure what that inventory is worth ?" JustForget about it . Besides , we can get it to do more write - off's next year . If I listened to you.there would be no next year . the company would be cut off from it's creditors and out ofbusiness .Do you agree with Sam or the senior partner?"} .Defend your position .[ .Should auditors consider the impact of their opinions on clients ? A negativeopinioni can sometimes destroy a company .