In addition to the usual mix of compilation, review and audit clients for which Sandra Teoh serves as a senior associate in a small office of a regional accounting firm, she has been assigned a new client that recently engaged the firm. Fab Fashion, an incorporated retail outlet, is a thriving local store. The business is run by a single owner/manager, Adam Rees, who makes all major decisions. The business has not previously used the services of an accounting firm. In addition to preparation of financial statements, the accounting firm will handle tax returns for the business. At her first visit to the client's office, Sandra is introduced to Kathy, the part-time bookkeeper who is also a full-time accounting student at the local university. At a subsequent meeting, Kathy confides to Sandra that she found the job at the beginning of the semester after an extensive search. Kathy really needs the money to help finance her education, and feels lucky to have found a good-paying job during the current economic downturn. Feeling that Sandra is someone she can talk to and get advice from, Kathy describes a situation that has been on her mind for some time now. Kathy's concern relates to the handling of sales revenues. When monies from sales revenues are counted and deposited on a weekly basis, a chart is filled out with categories carefully delineating the type of payment: cash, cheques, American Express, or Visa/Mastercard. Kathy's employer, after depositing the weekly total, brings this chart back with his own written-in total of the actual amount deposited. After looking over some of these weekly deposit charts, Kathy noticed that $500 cash was missing from each deposit. After a more thorough inspection of monthly tax documents that Adam Rees has filled out, Sandra noticed that the reported monthly gross revenue was $2,000 less than what had been actually counted. The employer is the only person handling the money after it has been counted. He is also the only one to deposit the money. When Sandra asked Mr. Rees about revenue not being reported for tax purposes, he assured her that every dollar of income was reported on the tax forms. Furthermore, Adam asserted, since Kathy wasn't the person who signed the forms, she shouldn't be concerned. Required: Explain FOUR (4) ethical issues arise from the above case and provide recommendations. [20 marks) In addition to the usual mix of compilation, review and audit clients for which Sandra Teoh serves as a senior associate in a small office of a regional accounting firm, she has been assigned a new client that recently engaged the firm. Fab Fashion, an incorporated retail outlet, is a thriving local store. The business is run by a single owner/manager, Adam Rees, who makes all major decisions. The business has not previously used the services of an accounting firm. In addition to preparation of financial statements, the accounting firm will handle tax returns for the business. At her first visit to the client's office, Sandra is introduced to Kathy, the part-time bookkeeper who is also a full-time accounting student at the local university. At a subsequent meeting, Kathy confides to Sandra that she found the job at the beginning of the semester after an extensive search. Kathy really needs the money to help finance her education, and feels lucky to have found a good-paying job during the current economic downturn. Feeling that Sandra is someone she can talk to and get advice from, Kathy describes a situation that has been on her mind for some time now. Kathy's concern relates to the handling of sales revenues. When monies from sales revenues are counted and deposited on a weekly basis, a chart is filled out with categories carefully delineating the type of payment: cash, cheques, American Express, or Visa/Mastercard. Kathy's employer, after depositing the weekly total, brings this chart back with his own written-in total of the actual amount deposited. After looking over some of these weekly deposit charts, Kathy noticed that $500 cash was missing from each deposit. After a more thorough inspection of monthly tax documents that Adam Rees has filled out, Sandra noticed that the reported monthly gross revenue was $2,000 less than what had been actually counted. The employer is the only person handling the money after it has been counted. He is also the only one to deposit the money. When Sandra asked Mr. Rees about revenue not being reported for tax purposes, he assured her that every dollar of income was reported on the tax forms. Furthermore, Adam asserted, since Kathy wasn't the person who signed the forms, she shouldn't be concerned. Required: Explain FOUR (4) ethical issues arise from the above case and provide recommendations. [20 marks)