The New Associate Steve Arrived Monday Morning At Ryan Assoc

The New Associate1steve Arrived Monday Morning At Ryan Associates

The case involves an audit scenario at Ryan & Associates, a CPA firm, during a busy season. Steve, a relatively new associate, is expected to handle an audit for a non-profit called Helping Our Children (HOC). The firm’s managing partner, Marcia, assigns Abby, a new associate and former bookkeeper for HOC, to complete the audit. Marcia instructs that Abby should not sign off on workpapers to avoid questions. Steve feels uneasy about the ethics of Abby auditing her own previous work and the instructions he received. The core ethical dilemma is whether Steve should voice his concerns about the integrity of the audit process under the current management directives and, if so, how to approach the situation appropriately.

Paper For Above instruction

The scenario within Ryan & Associates presents a classic ethical challenge faced by professionals: balancing respect for authority, adherence to professional standards, and personal integrity. In this case, Steve is confronted with a directive from his supervising partner, Marcia, which conflicts with the fundamental principles of accounting ethics, particularly integrity and objectivity. The key issue is whether Steve should voice his concerns about the instruction to allow Abby to perform and sign off on her own work, potentially violating independence and ethical standards, or remain silent to avoid conflict or repercussions.

Ethical frameworks in accounting, such as those provided by the AICPA Code of Professional Conduct and the International Federation of Accountants (IFAC), provide guidance emphasizing integrity, objectivity, professional competence, due care, confidentiality, and professional behavior. The principle of independence is central, especially during audits where objectivity must be maintained. Allowing someone to audit their own previous work directly threatens independence and can lead to questions about the credibility of the audit report (AICPA, 2020). This is a violation of auditing standards and undermines public trust in the profession.

Steve’s ethical dilemma is further complicated by the pressure from Marcia, who is under stress during a busy season and seems to prioritize completing the audit swiftly over compliance with ethical standards. His concern about the legality and professionalism of Abby auditing her own work is justified. If he complies with the directive, he risks breaching ethical standards, damaging his professional integrity, and potentially facing disciplinary action. Conversely, raising his concern might provoke conflict with Marcia or jeopardize his position, especially given her current mood and authoritative stance.

In addressing this situation, Steve’s ethical response should be grounded in the principles of professional conduct and the overarching responsibility to uphold the integrity of the profession. The first step is for Steve to privately clarify his concerns with Marcia, emphasizing the importance of maintaining independence and adhering to professional standards. He might say, "Marcia, I am concerned that allowing Abby to review and sign off on her own work may compromise the integrity of the audit and violate professional standards. I believe it’s important we follow the guidelines to ensure the credibility of the audit." This approach respects her authority while clearly articulating his ethical concerns.

If Marcia dismisses or dismisses his concerns, Steve should consider escalating the issue. He can consult the firm's ethics committee, if one exists, or seek guidance from a senior partner or an external professional body. Many professional organizations encourage members to discuss concerns openly and provide channels for raising issues without retaliation. If internal avenues are exhausted or unavailable, he might need to consider the professional obligation to refuse to participate in activities that violate ethical standards—potentially risking his job but maintaining his integrity (Kohlberg, 1984).

Furthermore, it’s crucial for Steve to document his concerns and any instructions he receives that may conflict with ethical standards. Proper documentation can protect him in case of future disputes and demonstrate that he took appropriate steps to address the ethical issue responsibly. The concept of whistleblowing is delicate but essential here; professionals have a duty to report unethical behavior or malpractice that could harm clients or the public interest (Near & Miceli, 1985).

In conclusion, the ethical course of action for Steve involves addressing his concerns directly with Marcia, advocating for adherence to ethical standards, and escalating the issue if necessary. Upholding integrity and independence in financial reporting is fundamental to the profession’s credibility and public trust. While organizational pressures may tempt compliance, professionals must recognize their responsibility to act ethically, even in challenging circumstances, to preserve their integrity and the reputation of the profession (ACFE, 2018).

References

• American Institute of Certified Public Accountants (AICPA). (2020). Code of Professional Conduct. AICPA.
• Association of Certified Fraud Examiners (ACFE). (2018). Fraud Examiners Manual. ACFE.
• Kohlberg, L. (1984). The Psychology of Moral Development: Moral stages and the idea of justice. Harper & Row.
• Near, J. P., & Miceli, M. P. (1985). Victimization of Whistleblowers: Theory and evidence. Administrative Science Quarterly, 50(1), 33-52.
• Public Company Accounting Oversight Board (PCAOB). (2010). Auditing Standard No. 1: An audit of financial statements.
• International Federation of Accountants (IFAC). (2018). Handbook of the International Code of Ethics for Professional Accountants.
• Public Company Accounting Oversight Board (PCAOB). (2021). Auditing Standard No. 2201: An Audit Engagement—Providing a Framework for Quality Audits.
• Windsor, D. C. (2017). Integrity in Accounting and Auditing: Principles, conflicts, and professional standards. Journal of Business Ethics, 140(3), 353–364.
• American Bar Association. (2005). Model Rules of Professional Conduct, Rule 1.6: Confidentiality of Information.
• Simons, R. (2002). Levers of Control: How managers use innovative control systems to drive strategic renewal. Harvard Business School Press.