Lew Walls is a CPA and a sole practitioner. Walls serves a small client base in the city of Tuscaloosa, Alabama. A potential client comes into Walls’s office one day and asks to discuss the possibility of Walls preparing her 1040 tax return for the year 2010. Walls asks questions about the client’s hair salon business and personal investments. Everything sounds all right to Walls, so he agrees to do the tax return. One week before the April 15 deadline the client comes into Walls’s office with a shoebox filled with tax receipts. Walls asks, ““What’s this?” The client answers, “All the information you need to do my taxes.” After drinking two glasses of water and doing some yoga exercises, Walls calmly tells the client he can’t work with a shoebox full of tax information.

The client assures Walls everything is in order, each taxable item or tax deduction category has been separated out, and there are explanations at the bottom of the shoebox for everything. Out of curiosity Walls removes the stacks and picks up the paper at the bottom, which is a receipt for a $200 pair of Nike shoes. Walls finds the explanation sheet for that purchase which says:

“Required for comfort on the job.” Later that day, after the client has left, Walls goes through the separate stacks and notices there is no earnings data from the salon. Walls calls the client, who explains that it is strictly a cash business and Walls should pick a number after looking at all the other tax information and then decide on the earnings amount from the business. She conditions the statement by saying she wants a $2,000 tax refund in 2010.

a. What would you do if you were Lew Walls? Why?

b. Assume the scenario just described occurs on April 14 and you know the client will not have enough time to find someone else to do her taxes if you decide to walk away from the engagement. Would that change your decision? Why or why not?

c. Assume that the client was your sister. Would that change what you do? Why or why not?