Case 49

1
Case 4-9

• The New Staff Member
• Curtis Bolen
• Tyler Gent

2
Outline

• Overview of Case
• Responses to Questions
• Ethical Issue/Recommendations
• Class Questions

3
Case Overview

• Pavzi Abbadoola
• Masters Degree in Accounting
• Isnt completely comfortable being in the U.S.
  because of cultural differences
• Joined a Big-Four CPA firm in January 2008

4
Case Overview Cont.

• - On first audit, came across an unusual
  transaction
• Tried to question the senior on the job but was
  unable to get her opinion on the transaction.
• Senior stated she trusted his judgment in dealing
  with the transaction and that the 1 million
  probably had been recorded correctly.
• Pavzi still doesnt feel right about the
  inability to discuss the disclosure of the
  transaction.

5
Question 1

• Why is it important to have self-confidence when
  working for a CPA? How can one develop the level
  of self-confidence needed to be successful,
  assuming that it is not an innate quality?

6
Question 2

• What are the professional responsibilities of a
  new staff member when faced with an accounting
  issue that appears to have been improperly
  recorded or reported?

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Question 3

• Assume that the senior on the audit is a CPA. Do
  you believe she has violates any ethical
  standards based on the limited information in the
  case? If so, explain which rules may have been
  violated. If not, explain why you feel that way.

8
Question 4

• Given the facts of the case, where do you think
  the 1 million should be recorded? Why? What
  difference does it make whether the item is
  recorded in one category in the income statement
  versus another? Consider the possible
  implications of the disclosure for future
  operating results.

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Ethical Issue/Recommendation

• Should Pavzi discuss the transaction with senior
  management to be certain it is recorded
  correctly?
• Because he is a new employee and the amount is
  material, we feel he should speak with senior
  management to be certain of the transaction.

10
Class Questions?