Denise Norris is a manager at Fitch & Jones, LLP, a regional audit firm in Providence, Rhode Island. Norris is preparing for a meeting with Alan Morse, the controller of Rhody Electronics, a publicly held company in Providence. The meeting concerns a variety of questions raised by the controller about the audit as follows.

• Why wasn't $1 million revenue recorded in 2016 for a December 31, 2016, transaction whereby Rhody agreed to sell $1 million of software to Ocean State Electronics in return for a stock issuance of that company? Ocean State, in return, agreed to sell $1 million of similar software to Rhody on January 5, 2017, in return for a stock issuance from Rhody.
• Why does the firm need additional testing of the collectability of receivables beyond that included in the original audit plan?
• Why has the firm hired a consultant to help with the audit of the company's information systems

Norris has decided to use the occasion to raise a few issues with Morse as follows:

• Documents are not being provided in full or on a timely basis, thereby requiring extra time and effort to complete the audit.
• Inquiries are being ignored; answers are often unhelpful; and some staff in the accounting department seem to resent those questions.
• Why did Morse request a staff member be removed from the audit team citing irreconcilable "personality" differences?

5.

Required information

Assume the controller is very defensive and fails to provide acceptable responses to the questions raised by Norris. Norris is concerned about the ability of the firm to complete the audit on time and under budget. She knows she has to do something to alleviate the tension that has developed with the controller and ensure that the audit comes to a successful conclusion. However, she is not sure how best to get it done. Answer the following questions:

• What role does ethical leadership play in the way Norris deals with the conflict? Consider how the way she handles the matter might influence the behavior of members of the firm.