Solving Ethical Dilemmas in the Accounting Profession

Final Project: Solving Ethical Dilemmas in

The Accounting Profession

Larissa Osterlund

ACC 260

November 30, 2012

Aishah Abdullah

Daniel worked with Banker Greenleaf, an accounting firm, as a staff accountant and was assigned to work on an audit for a client that they "shared with another Big Eight accounting firm" (The Dilemma of an Accountant, 2007) The ethical dilemma in this case puts Daniel Potters ethics are tested on the professional level. He was assigned to a special project to prepare an audit that under normal cases would be simple since the guidelines were previously set by the auditing body. Daniels first dilemma was finding out that both boss and client appeared to be drifting away from the codes of ethics. At one point, he faces the choice to follow the ethical codes or make an exception to the rule and withhold information which would mean that he would be forced to disregard the code of ethics.

While Daniel was working on the audit, he came across several problems within the account and was able to find a solution to all but one. One of the largest pieces of Real Estate owned by the client and its subsidiary is showing a value of $2 million dollars on the balance sheet. By Daniel's own estimate, the real estate valued at $100,000. He based this estimate on the location and condition of the property and how long it had been vacant. As the property was in an undesired part of town and the property was not well maintained as the structure was run down and had been unoccupied for several years. He discussed the proposal with the sub's managers the idea of writing the value of the property at $1,900,000. Also it was brought up that if this information were left out and someone were to rent the property and found out that the value was lower than they were told they could sue and the client would be responsible for damages. The $1,900,000 write down boiled down to a 7% impact on net income and 1% on the consolidated net income. According to the AICPA (American Institute of Certified Public Accountants), Anything that affects more than three statements needs to be disclosed in the CPA's(Certified Public Accountant) opinion. Oliver, who was an inflexible boss, told Daniel he was making a big deal out of something small and was jeopardizing the clients account ant the welfare of Baker Greenleaf.

The four main stakeholders involved in this case are Dan, Oliver Freeman, the client's management and Baker Greenleaf. Daniel's interest and impact in the case are that he is interested in perusing a career while upholding good ethical code of conduct. He studied the ethical codes and strived to carry out honest work and upholding high quality standards. One of his goals was to achieve early promotion within the company. The impact he has in this case is not abiding by the codes of ethics and withholding needed information from the client. He also risks losing his job and getting a bad review if he did not abide by his bosses wishes. Oliver Freeman's interest in the case is in keeping his superiority over his subordinates up and maintaining a good relationship with the client. He wants to show his loyalty to Baker Greenleaf by securing the client and its account. The impact in his decisions may cost the account and his job later on down the road. Baker Greenleaf's involvement in the case is as a Big Eight accounting firm, it wants to add to its client base and continue to s how a record of excellence. The impacts for this entity's actions are that they may lose the vast majority of their clients if the result of withholding