Alex Wong, CPA, is a sole practitioner. He is having lunch with one of his long-time clients, Hudson Hughes. Hudson is very excited because he just hired a new bookkeeper, Laura Ling. This name seems familiar to Alex and so after lunch he does a web search and finds a picture of Laura on the Internet. He realizes that he knows Laura because she used to be the bookkeeper for a previous client, Mark's Meats. He remembers her because she was fired for stealing from Mark's. He recalls that she took cash from the cash sales and altered the sales and deposit records to hide the theft. The owner, Mark, didn't believe she stole a large sum before the theft was discovered. Because she was a single mother with small children, Mark fired her but did not get anyone else involved. Alex only knew about the theft because he conducted a review engagement of Mark's Meats for the year the fraud took place. Alex is concerned for Hudson Hughes, Laura's new employer, but he is not sure what he should do. Required Discuss the above in terms of the code of professional conduct. Apply the ethical framework to this situation.

Alex Wong, CPA, is a sole practitioner. He is having lunch with one of his long-time clients, Hudson Hughes. Hudson is very excited because he just hired a new bookkeeper, Laura Ling. This name seems familiar to Alex and so after lunch he does a web search and finds a picture of Laura on the Internet. He realizes that he knows Laura because she used to be the bookkeeper for a previous client, Mark's Meats. He remembers her because she was fired for stealing from Mark's. He recalls that she took cash from the cash sales and altered the sales and deposit records to hide the theft. The owner, Mark, didn't believe she stole a large sum before the theft was discovered. Because she was a single mother with small children, Mark fired her but did not get anyone else involved. Alex only knew about the theft because he conducted a review engagement of Mark's Meats for the year the fraud took place. Alex is concerned for Hudson Hughes, Laura's new employer, but he is not sure what he should do. Required Discuss the above in terms of the code of professional conduct. Apply the ethical framework to this situation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the upcoming accounting honor society's annual scholarship dinner. Her firm supports the presentation because it hopes to recruit more excellent employees like Bridget. The university is 192 miles from her office. In order to get to the dinner by 5:00 p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to spend the night if the return trip is four hours or more. There is a student-run Inn and conference center across the street from campus that charges $102 per night. Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $310. Flying would require her to rent a car for $39 per day and pay an airport parking fee of $26 for the day. The company pays a per diem of $35 for Incidentals if the employee spends at least six hours out of town. (The per diem…
Identify factors in an ethical decision. Jim Sandrolini is an accountant for a local manufacturing company, Jim's good friend, Dan Carruthers, has been operating a retail sporting goods store for about a year. The store has been moderately successful, and Dan needs a bank loan to help finance the next stage of his store's growth. He has asked Jim to prepare financial statements that the banker will use to help decide whether to grant the loan. Dan has proposed that the fee he will pay for Jim's accounting work should be contingent upon his receiving the loan. Required: What factors should Jim consider when making his decision about whether to prepare the financial statements for Dan's store?
Darwish works as a Chartered Accountant with Gemilang World Berhad, a firm listed on Bursa Malaysia. At the same time, he registers for two years' professional examination papers of ICAEW. His works basically deals with keeping financial records of the company. Besides that, he is also responsible in awarding large maintenance contracts services to local contractors. At one time, when his company was seeking for a new contractor for a new maintenance services, without inviting other tenders, he simply accepted a bid from one contractor who promised to pay him RM15,000 as a gift once the contract was awarded to them. He justified his behavior as fair. "It is just a gift and fair to receive since the gift will be used to settle the ICAEW's fees. The knowledge gains from the study will indirectly benefit the firm," Darwish convinces himself. He believed he was entitled to get paid on his investment of time and effort in acquiring the international professional qualification. Required: a)…
Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the upcoming accounting honor society’s annual scholarship dinner. Her firm supports the presentation because it hopes to recruit more excellent employees like Bridget. The university is 192 miles from her office. In order to get to the dinner by 5:00 p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to spend the night if the return trip is four hours or more. There is a student-run inn and conference center across the street from campus that charges $101 per night. Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $290. Flying would require her to rent a car for $40 per day and pay an airport parking fee of $25 for the day. The company pays a per diem of $36 for incidentals if the employee spends at least six hours out of town. (The per diem…
Yesterday, Extensive Enterprise Inc. released its 2018 annual report on the company’s website. While reading the report for his boss, Rafael came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Asha, for help. RAFAEL: Asha, do you have a second to help me with my reading of Extensive’s annual report? I’ve come across several unfamiliar terms, and I want to make sure that I’m interpreting the data and management’s comments correctly. For example, one of the footnotes to the financial statements uses “the book value of Extensive’s shares,” and then in another place, it uses “Economic Value Added.” I’ve never encountered those terms before. Do you know what they’re talking about? ASHA: Yes, I do. Let’s see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole.…
Sue is a customer account representative for ABC Company. She recently acquired several new accounts when a previous representative, Dan, took an early retirement. Sue reviewed each of Dan’s accounts to help familiarize herself with his clients and understand how she can better serve each one’s individual needs. As she was reviewing the client list, she found a major customer she had never heard of before. Surprised that she had not yet done business with the company, she called it to introduce herself as the new representative. When Sue placed the call, she found that the reported number had been disconnected. Thinking that the customer may have done business with ABC in the past and have moved on, she reviewed the account transactions and found that the most recent transaction had taken place the week prior. During her review, she also noticed the latest transaction was for an unusually large amount for ABC. As Sue pursued her curiosity, she went to other employees to find out more…
Your friend, Mark, owns the dog sitting company, Mark’s Dogs, out of his home, watching dogs a maximum of 5 dogs at a time at his home, with the dog owners dropping the dogs at his home. Terms of service require payment in cash or check when the owner retrieves the dog. Mark’s business has grown, and Mark will be moving into an empty storefront which is large enough for him to watch 20 dogs at a time. Regarding this expansion, he will be moving from a cash only business to an accrual-based business. Briefly explain to Mark the dual entry system of accounting. Inform Mark as to the new accounts which are created when a business moves from a cash-only to an accrual business. Would the nature of Mark’s business require any period end adjustments? If so, which ones? If Mark accepts credit cards, will this be recorded as cash?
A CPA has been doing the records for a company for the last ten years. She was approached by the owner to create two sets of records because he is going through a divorce and wants to keep as much of his assets as possible. Compare and contrast the pros and cons of the CPA doing as asked. Explain how you would act from an ethical standpoint.
You are a recently qualified accountant and have accepted a job as financial controller for a well- established family business which supplies equipment to photographers, both by mail order and from its warehouse outlet. Its customers range from enthusiastic amateurs through to part-time professionals and owners of busy studios. The customers' payment methods reflect their diversity. There are credit card transactions and customers with 30-day credit business accounts. There is also a surprisingly large number of customers who collect their goods from the warehouse and pay in cash. You are told that cash payment probably reflects the nature of the customers' own receipts, as some photographers will often be paid in cash for weekend wedding assignments. In your first week at the company, the sales director (the principal shareholder's son) brings to you a cheque in settlement of the account of a major customer. He explains that the cheque (which appears to clear the amount due) is in…
You are a financial adviser and the following information is an extract of data you gathered as part of fact-finding during an initial client consultation for married couple Jacinda (aged 38) and Steven (aged 40) Oldham. Jacinda has opted for a part-time teaching assignment with the local school for the last 3 years. Three years ago, she took a career break from her full-time teaching career given growing children. Steven works as a Senior Clinical Nurse Consultant at a local government hospital. They have two children who are aged 12 and 14. • The couple would like to know how much money they will receive after paying tax for the year ended 30th June 2020. They would like advice on how to reduce their tax liability in the future. • The Oldham’s have invested over the years in shares of several banks. They have come to you understand how they should invest in the future. Part of this investment is for the higher education of the children. The balance is to buy a property in the country…
2. Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the upcoming accounting honor society’s annual scholarship dinner. Her firm supports the presentation because it hopes to recruit more excellent employees like Bridget. The university is 196 miles from her office. In order to get to the dinner by 5:00 p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to spend the night if the return trip is four hours or more. There is a student-run inn and conference center across the street from campus that charges $101 per night. Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $300. Flying would require her to rent a car for $39 per day and pay an airport parking fee of $25 for the day. The company pays a per diem of $35 for incidentals if the employee spends at least six hours out of town. (The per…
The following situation is in chronological order. 1. Parker decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about its surfboards. 3. Two days later, he requests Surfing USA Co. to make a surfboard. 4. Three days later, Surfing USA Co. sends him a purchase order to fill out. 5. He completes and sends back the purchase order. 6. Surfing USA Co. receives the completed purchase order. 7. Surfing USA Co. completes the surfboard. 8. Parker picks up the surfboard. 9. Surfing USA Co. bills Parker. 10. Surfing USA Co. receives payment from Parker. In a memo to the president of Surfing USA Co., answer the following. (a) When should Surfing USA Co. record the sale? (b) Suppose that with his purchase order, Parker is required to make a down payment. Would that change your answer?