Professional Liability: Please Respond To The Following

Professional Liabilityplease Respond To The Followingfrom The Case

Professional Liabilityplease Respond To The Followingfrom The Case

"Professional Liability" Please respond to the following: From the case study, determine the main potential ethical dilemmas. Next, use the seven (7) steps in the ethical decision-making framework to recommend one (1) course of action you would take in order to avoid the ethical dilemmas. Provide a rationale to support your recommendation. From the case study, based on your recommendation in Part I of this discussion, suggest one (1) strategy that would support you making the right decision without undermining the manager’s confidence in your problem-solving ability in a difficult situation. Provide a rationale to support your response.

Case Study You have worked as a staff auditor for two and one-half years and have mastered your job. You will likely be promoted to a senior position after this busy season. Your current senior was promoted about a year ago. He appreciates your competence and rarely interferes with you. As long as he can report good performance to his manager on things she wants, he is satisfied.

The manager has been in her position for three years. She is focused on making sure audits run smoothly and is good at this. She is not as strong on the softer skills. Although she is approachable, her attention span can be short if what you are saying does not interest her. You are aware that she expects her teams to perform excellently during this busy season and she hopes to be promoted to senior manager as a result, bringing her closer to her goal of making partner early.

The audit engagement on which you are working has become increasingly difficult since last year's engagement because of some complicated accounting transactions that the client made. There has also been unexpected turnover in accounting personnel at the client. This has made interacting with the client and getting the information you need in a timely manner problematic. However, the engagement time budget and the audit fee remain the same as last year's. Further, four staff auditors are assigned to the engagement, and there are no additional staff available to transfer in to ease the workload.

Your senior now tells you that the manager has requested that you, he, and the other staff auditors do an additional analysis of a potential misstatement in one of the client's accounts. Even with your team's current workload there is significant danger that the engagement will run “over budget.” You know that if you do the analysis thoroughly, it will further endanger meeting the time budget the manager had planned. The more time you spend on the engagement, the less profitable it will be for the audit firm, which will clearly displease the manager and her superiors. As a group, the staff auditors discuss the situation and express their concerns regarding the perceptions that running over budget will create and the reputational issues that short-circuiting the analysis could create.

When your senior stops by to discuss the new plan, the group raises its concerns. He talks to the group and implies that he would be satisfied if the team did either of the following: complete the analysis and simply not record the hours (doing so would prevent the reported audit hours from going too far over budget) or do a minimal job on the analysis, which would save time and avoid having to question the client too much. You and a few other staff members express discomfort with either of these strategies. It is suggested that the ramifications of the new order be made clear to the manager. The senior wants nothing to do with this.

He says, “She doesn't want to hear these details so just use one of the ideas I have already given you.†When he leaves, several staff members start griping about what they are being asked to do. A couple say they are going to leave the firm after this busy season, so they don't really care about this issue. Another says, “We've been told what to do. Let's just get on with it.â€

Paper For Above instruction

The case presents a complex ethical dilemma involving integrity, professional responsibility, and organizational pressures. The primary ethical issues are whether staff auditors should follow their professional and ethical obligations to conduct thorough and truthful analysis versus succumbing to managerial pressures to underrepresent work hours or compromise the quality of auditing procedures for profit and efficiency. The dilemma centers on the potential of violating ethical standards by either falsifying work records or doing substandard work to preserve budget and meet managerial expectations.

Using the seven-step ethical decision-making framework, the first step involves recognizing the ethical issue—narrowing down whether the primary concern is honesty, objectivity, or professional competence. The second step entails identifying the stakeholders: staff auditors, the client, the audit firm, the manager, and the public interest. The third involves contemplating the ethical principles involved, such as integrity, objectivity, professional competence, and due care.

The fourth step requires considering alternative actions. These include: (1) refusing to conduct or report incomplete analysis, (2) raising concerns transparently with the manager or higher authority, (3) documenting concerns ethically, and (4) taking no action but internally lamenting the situation. The fifth step involves evaluating the consequences of each action, weighing the risk of professional misconduct against the potential fallout within the firm.

The sixth step is making a decision based on ethical principles and the long-term professional reputation. The final step involves implementing the choice—preferably advocating for transparency and adherence to professional standards, even if this risks internal disagreement or conflict.

Given this framework, I recommend that the staff insist on conducting a thorough analysis and documenting all concerns ethically. They should request a formal discussion with the manager or escalate if necessary to uphold integrity and professional standards, despite managerial reluctance. The rationale is that professional audits must adhere to ethical standards to ensure public trust, avoid misconduct, and uphold the profession’s integrity. Shortcuts or falsification could lead to violations of PCAOB standards, legal repercussions, and damage to reputation.

To support making the right decision without undermining the manager’s confidence, a strategic approach involves framing concerns around the importance of audit quality and compliance with ethical standards as beneficial for the organization’s reputation and long-term profitability. It’s crucial to communicate that adhering to proper procedures minimizes risk and supports the firm’s credibility. Demonstrating competence and professionalism in addressing ethical concerns can build trust, even in challenging situations, by showing commitment to ethical principles and long-term organizational integrity.

References

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• Public Company Accounting Oversight Board (PCAOB). (2020). Auditing Standard No. 5.
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