Week 5 Essay: Ethics Case

Barbara Whitely had great expectations about her future as she sat in her graduation ceremony in May 2015. She was about to receive her Master of Accounting degree, and next week she would begin her career on the audit staff of Green, Thresher & Co., CPAs.

Things looked a little different to Barbara in February 2016.She was working on the audit of Delancey Fabrics, a textile manufacturer with a calendar year-end.The pressure was enormous. Everyone on the audit team was putting in 70-hour weeks, and it still looked as if the audit wouldn't be done on time.Barbara was doing work in the property area, vouching additions for the year. The audit program indicated that a sample of all items over $20,000 should be selected, plus a judgmental sample of smaller items.When Barbara went to take the sample, Jack Ben, the senior, had left the client's office and couldn't answer her questions about the appropriate size of the judgmental sample.Barbara forged ahead with her own judgment and selected 50 smaller items. Her basis for doing this was that there were about 250 such items, so 50 was a reasonably good proportion of such additions.

Barbara audited the additions with the following results: The items over $20,000 contained no misstatements; however, the 50 small items contained a larger number of misstatements.In fact, when Barbara projected them to all such additions, the amount seemed quite significant.

A couple of days later, Jack Bean returned to the client's office.Barbara brought her work to Jack in order to apprise him of the problems she found and got the following response:

"Gosh, Barbara, why did you do this?You were only supposed to look at the items over $20,000 plus 5 or 10 little ones.You've wasted a whole day on that work, and we can't afford to spend any more time on it.I want you to throw away the schedules where you test the last 40 small items and forget you ever did them."

When Barbara asked about the possible audit adjustment regarding the small items, none of which arose from the first 10 items, Jack responded, "Don't worry, it's not material anyway.You just forget it; it's my concern, not yours."

Required:In a 3 to 4 page paper, answer the following questions regarding the case:

1. Describe the ethical dilemma in detail, using pertinent facts to support your answer.
2. Identify each of the stakeholders and fully explain how each person/groups is a stakeholder.
3. List, in detail, several alternative responses that can be selected regarding the dilemma and explain the effect that selecting each of the alternative responses would have on the stakeholders.
4. Fully explain the action and implementation plan you would take regarding the response you would select.