Case 1-2 Giles and Regas
Ed Giles, 35 year old CPA and a partner at Saduga & Micha accounting firm
Susan Regas, 25 year old senior accountant in the same firm
Giles and Regas been dating for four months
They well know firm policy does not permit different ranks to date
Most of the staff seem to know about their relationship
Regas was assigned to audit CAA industry under Giles supervision
Giles and Regas spending personal time during workday
Ruth Revilo warns Regas not to jeopardize Regas future by dating Giles
Gile and Regas goes to farewell dinner to put relationship aside until CAA audit ends
Mark Sax, CAA ...view middle of the document...
If the CAA is public company, investors or shareholder relies on the audit report to make their judgment. Giles and Regas work of the audit report may mislead and damage the public interest because of their irresponsibility.
4.Accounting and Auditing Ethic Standards
Violates AICPA code of conduct
Objectivity. All CPAs need to maintain a professional mental attitude and free of conflict of interests in carrying out their responsibility
Integrity. Giles and Regas subordinates the client interest with their personal gain and benefit. They did not carry out their objectivity and due care as professionals. Client questions the accuracy of auditing fees were charged in suspecting Giles and Regas spend personal time during work time. Giles and Regas could also be accused of they have the potential to cover up for each other if one or both of them screw up o auditing.
Responsibility. The primary goal of CPA’s responsibility to the client and the to public is to serve their interest with accuracy. Giles and Regas could be accused by the client of their inefficient work and may also question the accuracy of their work.
Although the HR policy clearly stated different ranks in the firm can not date, it still failed to cease or prevent such thing from happening
Seems like most of staff and among the partners know about Giles and Regas dating,higher management takes zero action about the matter.
Weak ethical stands and weak enforcement power may encourage more employees of different rank to date and to slack off during work.
Lack of oversight from higher management to punish Giles and Regas using work time as personal time.
6.Accounting, Auditing, or Taxation Issues
CAA industry’s audit report may be inefficient and inaccurate. The potential of insufficient audit report may affect financial statements.
Fire both Giles and Regas because they have a conflict of interest between their dating and working on audit report.
Give them a second chance
Fire both Giles and Regas
Legality. The firm has ever reason to to fire both Giles and Regas because they did violate the firms policy and more importantly they are jeopardizing the firms reputation.
Professional Standards. Giles and Regas both violated multiple AICPA code. Most important of all is the integrity standard and along with objectivity, and responsibility.
Rights theory. In accounting, CPA has the duty to ensure the accuracy of financial statement and auditing report. Client CAA industry’s right is violated here. They have the right to acquire reliable financial information which in this case Giles and Regas audit work can be questioned for accuracy. They have the obligation to make sure the audit report is accurate.
Justice Theory. It is not fair for CAA industry that Giles and Regas used their paid auditing time for their personal time. CAA can now question how is the auditing fees being fairly charged...