Questions from Accounting Ethics

Q: Your tax client, Steve Michaels, told you that his former

Your tax client, Steve Michaels, told you that his former accountant who prepared his annual tax returns made errors that resulted in him suffering more than $100,000 in losses. Apparently, the errors...

Q: Helen Roberts is reviewing two transactions recorded by her client, Biotechnologies

Helen Roberts is reviewing two transactions recorded by her client, Biotechnologies (Biotech), as part of her accounting firm’s annual audit of the client for the December 31, 2021, financial statemen...

Q: Joker & Wild LLC has just been sued by its audit client

Joker & Wild LLC has just been sued by its audit client, Canasta, Inc., claiming the audit failed to be conducted in accordance with generally accepted auditing standards, lacked the requisite care ex...

Q: QSGI, Inc., is in the business of purchasing, refurbishing

QSGI, Inc., is in the business of purchasing, refurbishing, selling, and servicing used computer equipment, parts, and mainframes. During its 2008 fiscal year (FY) and continuing up to its filing for...

Q: In the 2007 case of Paul V. Anjoorian v. Arnold

In the 2007 case of Paul V. Anjoorian v. Arnold Kilberg & Co., Arnold Kilberg, and Pascarella & Trench, the Rhode Island Superior Court ruled that a shareholder can sue a company’s outside accounting...

Q: On December 13, 2012, Vertical Pharmaceuticals Inc. and an

On December 13, 2012, Vertical Pharmaceuticals Inc. and an affiliated company sued Deloitte & Touche LLP in New Jersey state court for alleged accountant malpractice, claiming the firm’s false accusat...

Q: Kay & Lee LLP was retained as the auditor for Holligan Industries

Kay & Lee LLP was retained as the auditor for Holligan Industries to audit the financial statements required by prospective banks as a prerequisite to extending a loan to the client. The auditor knows...

Q: When financial results aren’t what they seemed to be – and a

When financial results aren’t what they seemed to be – and a company is forced to issue material financial restatements –should it be required to develop policies to claw back incentive pay and bonuse...

Q: Alexion is a global biopharmaceutical company whose shares are traded on the

Alexion is a global biopharmaceutical company whose shares are traded on the Nasdaq Stock Market in the U.S. The company develops and sells drugs for patients with life-threatening rare and ultra-rare...

Q: Billy Muldoon, CPA and CFO, just finished reading a preliminary

Billy Muldoon, CPA and CFO, just finished reading a preliminary draft of his company’s annual audit report from Local CPAs, LLC. He was concerned that the CPA firm plans to issue a qualified audit rep...