Question: Identify all ethical issues faced by the following individuals, discuss applicable

rules that govern their behavior for each issue based on the below case study:

Amelia Ackerman

Brian Ballow

Christine Chan

Eric Eng

Nathan Newton

Once upon a time, in 2010, Amelia Ackerman decided to form a mid-sized accounting firm located in San Diego to perform only tax services for her clients right after she graduated college. Amelia Ackerman was initially very successful because her marketing tag line was: Ive never lost an IRS audit. However, Amelia Ackerman never actually had, nor would she ever, represent a client in an audit before the IRS or any other tax agency. She simply prepared their income tax returns. In fact, Amelia Ackerman never herself took the CPA assessment despite otherwise having the educational experience to become licensed.

From 2010 until 2012, Amelia Ackerman operated the firm under the name of Ackerman &

Associates Accounting Firm, Inc. and brought on her first employee, Brian Ballow, on July 1, 2012. At the time Brian Ballow was just an accounting student but showed such potential that Amelia Ackerman gave him a fifty percent (50%) equity interest in the firm on July 1, 2013, and promptly changed the name of the firm to Ackerman, Ballow & Assoc., Inc. Brian Ballow graduated and passed his CPA assessment in 2015 and has worked with Amelia Ackerman at Ackerman, Ballow & Assoc., Inc. ever since.

Brian Ballow would not be Ackerman, Ballow & Assoc., Inc.s only employee. As the firm grew additional CPAs and staff were added. First, Amelia Ackerman wanted to expand the firms services to include audit and other attest engagements, so in 2016 she hired Christine Chan. Christine Chan had spent the last five-years as a California licensed CPA and the controller of a large, publicly traded company, Davidson, Inc. Davidson, Inc. manufactures pharmaceutical products to treat often neglected tropical diseases like Dengue Fever, leprosy, and rabies.

Davidson, Inc. was run by an iron-fisted CEO named Oscar Ojeda. For assessmentple, in 2015 Oscar Ojeda and Christine Chan flew from Davidson, Inc.s New York headquarters to Panama for a meeting with that countrys Minister of Public Health. At the meeting between Oscar Ojeda, Christine Chan, and the Panamanian Minister of Public Health, Oscar Ojeda got upset and shouted in the Ministers face: If you dont buy our companys drugs you just may not live to see another day! Quick to act, Christine Chan tried to smooth the relationship and told the Minster: Look, hes drunk. There must be something we can do to convince Panama to buy our companys lifesaving drugs? What if we sponsor your World Cup soccer team? I hear youre a big fan

Despite saving the procurement contract Christine Chan was left uneasy by the ordeal and hence her decision to leave Davidson, Inc. for the greener pastures of Ackerman, Ballow & Assoc., Inc. the next year. Amelia Ackerman also added Eric Eng, Fran Fazio, and George Goldberg (all California licensed CPAs), and Harry Hamilton and India Isak (administrative staff personnel who had no prior accounting experience) in 2017. Unknown to Amelia Ackerman, Eric Eng moonlights as a tax return preparer. Eric Engs main area of expertise is preparing tax returns for strippers. Because of the sensitive nature of their work, i.e., the large amounts of potentially unreported cash income, Eric Eng charges each stripper $15,000, per year, to prepare their tax returns. Eric Eng is further in the habit of making up dependents and arbitrarily changing his stripper/clients income to maximize their entitlement to certain tax incentives like the Earned Income Tax Credit. But Eric Eng is a savvy businessperson too. He frequently referred his stripper/clients to Dr. Peter Patel for all plastic surgery needs. In exchange for referring each stripper/client, Dr. Peter Patel sends Eric Eng a bottle of wine, and each year Dr. Peter Patel takes Eric Eng on his private yacht for a weekend getaway trip to Catalina Island. A seventh and eighth CPA, Kyle Keene and Larry Little, respectively, also interviewed for jobs with Ackerman, Ballow & Assoc., Inc. in 2017. During the Kyle Keenes interview, he and Amelia Ackerman had the following exchange:

Amelia: What would make you a valuable member of my team?

Kyle: WellIm very hard working, I have 5 years of audit experience, and I bring

a level of diversity that I think your firm is missing.

Amelia: What!?!?!? What could my amazing firm be missing?

Amelia: What would make you a valuable member of my team?

Larry: Im very hard working, I have 6 years of audit experience, and I love your

shoes.

Amelia: Well thats so kind of you! We at Ackerman & Ballow pride ourselves at

being a tight family. Is there anything about you that I should know before we

make a decision?

Larry: It shames me to admit it, but Im a convicted felon. When I was 19 years old,

I was in a bar fight and knocked the bouncer out. Im not proud of my action.

I feel that Ive done my time and that is all behind me now.

Amelia Ackerman was appalled at Larry Littles felony conviction. Because of that she decided not to hire him, but what Amelia Ackerman did not know at the time was California had recently passed a law making it illegal to discriminate against a former felon in the workplace.

Nevertheless, based on the earlier additions, Ackerman, Ballow & Assoc., Inc. was able to land two new audit clients in 2018: the aforementioned Davidson, Inc., plus James & Johnson. One of the key reasons Ackerman, Ballow & Assoc., Inc. was able to land James & Johnson as an audit client was the close relationship between James & Johnsons CEO and Harry Hamilton. You see, Harry Hamilton dated James & Johnsons CEO, Mary Mark, in college. They eventually broke up, but Harry Hamilton and Mary Mark stayed in regular contact. Harry Hamilton, knowing Mary Mark so well, told Brian Ballow that she loved football. Seizing on the opportunity and knowing that James & Johnson was in the market for a new accounting firm, Brian Ballow bought and sent Mary Mark season box seat tickets for next years Los Angeles Charges home games. In the envelope to Mary Mark, Brian Ballow wrote the following note: Hope I can go with you sometime! Love, your friends at Ackerman, Ballow & Associates. It worked like a charm, and the rest was history. Amelia Ackerman, Christine Chan, Eric Eng, and Harry Hamilton all began working on James & Johnsons audits from then on.

The timing of Davidson, Inc. becoming a client was also superb. Amelia Ackerman, Brian Ballow, Christine Chan, Fran Fazio, and India Isak would all eventually work on Davidson, Inc.s audit team, but during Christine Chans interview two (2) years earlier, Christine Chan informed Brian Ballow of something very interesting. During that 2016 interview, Christine Chan told Brian Ballow that Davidson, Inc. was just about to launch a drug that would cure Dengue Fever once and for all. Nobody else except Christine Chan and Oscar Ojeda knew the news at the time.

Excitedly, Brian Ballow told Amelia Ackerman about the new drug and its potential. Amelia

Ackerman promptly told her on-again-off-again romantic partner Nathan Newton about the new drug and its potential. Thus, in 2019, Nathan Newton bought $1,000 worth of Davidson, Inc. to add to his very modest retirement savings. As Ackerman, Ballow & Assoc., Inc. prospered, Eric Eng and Christine Chan were eventually made partners in 2019, but Fran Fazio and George Goldberg never rose above the level of manager. But George Goldberg was not left out in the cold. George Goldberg was introduced to Mary Mark by Harry Hamilton, the two fell in love, and George Goldberg married Mary Mark (now Mary Goldberg) in a small ceremony on a private Caribbean island in 2020. Inspired by their nuptials, Amelia Ackerman and Nathan Newton tied the knot themselves on January 1, 2022.