Ebook Contemporary Auditing Real Issues and Cases 8Th Edition Knapp Solutions Manual Full Chapter PDF
Ebook Contemporary Auditing Real Issues and Cases 8Th Edition Knapp Solutions Manual Full Chapter PDF
Synopsis
In this case, a staff accountant of a large, international accounting firm is dismissed by her
employer when her integrity is questioned by a senior auditor. The staff accountant had told the
senior auditor, who at the time was her immediate supervisor on an audit engagement, that she had
not taken the CPA exam the month prior to joining the firm. In fact, the staff accountant had taken
the exam but did not want to disclose that fact to her coworkers because she believed that she had
not done well on the exam. After learning that she had passed all parts of the exam, the staff
accountant informed the senior. The senior immediately brought the matter to the attention of the
office managing partner. The senior insisted that since the staff accountant had been untruthful, she
could not be trusted in the future and, as a result, was not suited for the independent auditor role.
After consultation with other audit partners in the practice office, the office managing partner agreed
with the senior and dismissed the staff accountant. In addition to the ethical issues implicit in this
case, the case also provides several insights on the work role and work environment of a newly-hired
staff accountant.
222 Case 6.1 Leigh Ann Walker, Staff Accountant
1. Leigh Ann was well qualified for an entry-level position in public accounting given her college
credentials.
2. According to Leigh Ann’s college friends, she was sometimes too “intense.”
4. Leigh Ann was dishonest with her supervisor, Jackie Vaughn, when Jackie asked her if she had
taken the CPA exam.
5. Leigh Ann was dishonest with Jackie because she was afraid that she had not done well on the
CPA exam and wanted to avoid the embarrassment of admitting that fact when she received her
grades on the exam.
6. Following the discovery of Leigh Ann’s dishonesty, Jackie told the office managing partner that
she did not want Leigh Ann assigned to any of her jobs in the future.
7. After consulting with the other audit partners in the office, the office managing partner informed
Leigh Ann that she was being dismissed.
Case 6.1 Leigh Ann Walker, Staff Accountant 223
Instructional Objectives
2. To demonstrate the importance of supervisors on audit engagements being able to trust their
subordinates.
3. To illustrate the nature of the newly-hired staff accountant’s work role and the frustrations and
job-related pressures that individuals occupying that role often experience.
I typically assign this case early in the semester to give students insight into the staff
accountant’s work role and work environment. Given the ethical issues raised in this case, it could
be assigned as well during discussion of the AICPA Code of Professional Conduct. The key point
that I believe should be stressed in this case is the critical need for auditors to be able to trust their
colleagues. This is particularly important for auditors in supervisory positions who have to “sign
off” on the work of their subordinates. A common reaction to this case by students is that Jackie
Vaughn over-reacted to the “white lie” told by Leigh Ann. In the past, several of my students have
pointed out that the dishonesty exhibited by Leigh Ann was not directly job-related. When students
express that view, I encourage them to look at this issue from the standpoint of Jackie. Ironically,
Jackie was apparently a very “intense” person, similar to Leigh Ann, and committed to advancing as
rapidly as possible within the firm. From her perspective, she simply did not want to assume the risk
of taking responsibility for the work of an individual who had proven that she could rationalize or
justify dishonesty.
Another lesson that I hope students learn from this case is the need for them to have a
“balanced” perspective when they assume that first professional role in their careers. For
professionals to be “successful” in the fullest sense of that word, they need to recognize that their
work roles should not consume their entire existence. As proven by this case, individuals with
excellent credentials and an extremely high level of motivation sometimes fail because they place
too much emphasis on succeeding and on being perceived as successful.
1. Students tend to react quite differently to this series of questions. Following are summaries of
some of my former students’ responses to these questions.
a. Jackie should have given Leigh Ann a chance to prove that she could be trusted. If I had
been Jackie, I would have watched her very closely on her next few assignments. If I saw
any indication of a lack of integrity on those assignments, I would have gone to the office
managing partner at that point and asked that she be dismissed. Roberts was placed in a
very difficult situation. He probably trusted the judgment of Jackie, given her reputation
within the office, and likely did not want to offend her by going against her wishes.
Apparently, the other audit partners sided with Jackie, so Roberts probably had no choice
other than to dismiss Leigh Ann.
224 Case 6.1 Leigh Ann Walker, Staff Accountant
b. I believe that Jackie treated Leigh Ann unfairly since she did not even discuss the matter
with her. Jackie should have taken into consideration the fact that Leigh Ann was a newly-
hired employee who simply wanted to make a good first impression. At the very least,
Jackie should have sat down with Leigh Ann and explained her view of the matter and then
given Leigh Ann an opportunity to defend herself. Rather than immediately taking the
matter to the other audit partners in the office, the office managing partner should have
spoken with Leigh Ann first and then arranged a meeting with Leigh Ann, Jackie, and
himself to discuss the situation. Since Leigh Ann was apparently a very bright individual,
she almost certainly would have understood the mistake that she had made and been very
careful to avoid making similar errors of judgment in the future.
c. I believe that Jackie was justified in insisting that Leigh Ann be fired. Leigh Ann’s ability
to “lie on the spot” about a fairly trivial matter indicated that she could not be trusted
regarding more serious matters. If she had not been fired, then this situation would
probably have leaked out eventually and damaged her credibility with the other members of
the audit staff in her office. Consequently, it was probably best that Roberts took the action
that he did. Of course, he could have been much harsher and not given her two months to
find a job, and he could have disclosed the real reason that she was dismissed to
prospective employers that she subsequently contacted. So, in a sense, she was not
penalized that heavily for her dishonesty. [Note: According to the placement counselor
who provided much of the information for this case, the reason given for Leigh Ann’s
dismissal by the office managing partner to prospective employers she contacted was
overstaffing, i.e., his office had hired too many staff accountants that particular year.]
Note: This case has easily been among the most popular cases in the earlier editions of this
textbook. Several adopters have sent me comments regarding this case. I appreciate all such
feedback. Bob Eskew, Purdue University, sent me a note reporting that his students were much
more supportive of Leigh Ann’s dismissal than were my students. Additionally, Bob noted that his
students were “unanimously critical” of the office managing partner: “They felt that he fired
someone for lying and then engaged in exactly the same behavior when explaining externally the
reason for Ms. Walker’s departure from the firm.” That’s an excellent point and one that instructors
might consider raising if their students do not.
2. Again, this is a very subjective question that evokes quite different responses from students.
Following are summaries of some of the general points made by former students of mine in response
to this question.
a. Independence and integrity are the two key traits that auditors should possess. If an auditor
lacks either one of these traits, his or her work cannot be trusted. Granted, an individual
such as Leigh Ann may not do something very “dumb” like lying about whether or not she
completed an audit procedure. But, she probably would be inclined to under-report the
number of hours she worked so that she could come in under budget on her assignments
and do other somewhat dishonest things to impress her supervisors. Overall, I believe that
having her on the audit staff of an office would be disruptive to the operations of that
office.
Case 6.1 Leigh Ann Walker, Staff Accountant 225
b. The AICPA Code of Professional Conduct says nothing about the need for integrity on the
part of auditors while they are not in their professional role. I do not believe that it is the
responsibility or right of CPA firms to attempt to monitor the “personal” integrity of their
employees. I can see where one might argue that a person who is dishonest or “immoral”
in some sense away from work would likely engage in similar behavior while at work.
However, until an employer demonstrates that a lack of personal integrity causes an
individual to be a poor employee, I do not believe the employer has a right to penalize such
an employee in any way.
c. It is impossible to distinguish between one’s personal integrity and his or her professional
integrity. If someone is dishonest, they will be dishonest in all phases of their life.
Note: It is quite interesting that most students express the view that Jackie Vaughn and Don Roberts
overreacted to the dishonest statement made by Leigh Ann. However, in response to the second
question, the majority of students tend to imply that an individual such as Leigh Ann is unsuited for
the auditor’s professional role.
Another random document with
no related content on Scribd:
siivetön naaras; toisissa lajeissa on kummallakin sukupuolella tämä
ominaisuus.
8. Koralli.
9. Kangashärkä.
Kun kuopan sivut ovat tulleet niin luisuiksi ja sileiksi, ettei mikään
hyönteinen pääse kiipeämään niitä ylöspäin, kaivautuu toukka
kuopan pohjalle, niin että siitä näkyy vain uhkaavat leuvat, jotka
selkoselälleen avattuina odottavat saalista.