Sue was puzzled as to what course of action to take. She had recently started her...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sue was puzzled as to what course of action to take. She had recently started her job with a national CPA firm, and she was already confronted with a problem that could affect her future with the firm. On an audit, she encountered a client who had been treating payments to a large number of employees as payments to independent contractors. This practice saves the client the payroll taxes that would otherwise be due on the payments if the workers were classified as employees. In Sue's judgment this was improper as well as illegal and should have noted in the audit. She raised the issue with John, the senior accountant to whom she reported. He thought it was a possible problem but did not seem willing to do anything about it. He encouraged her to talk to the partner in charge if she didn't feel satisfied. She thought about the problem for a considerable time before approaching the partner in charge. The ongoing professional education classes she had received from her employer emphasized the ethical responsibilities that she had as a CPA and the fact that her firm endorsed adherence to high ethical standards. This finally swayed her to pursue the issue with the partner in charge of the audit. The visit was most unsatisfactory. Paul, the partner, virtually confirmed her initial reaction that the practice was wrong, but he said that many other companies in the industry follow such a practice. He went on to say that if an issue was made of it, Sue would lose the account and he was not about to take such action. She came away from the meeting with the distinct feeling that had she chosen to pursue the issue she would have created an enemy. Sue still felt disturbed and decided to discuss the problem with some of her coworkers. She approached Bill and Mike, both of whom had been working for the firm for a couple of years. They were familiar with the problem because they had encountered the same issue when doing the audit the previous year. They expressed considerable concern that if she went over the head of the partner in charge of the audit, they could be in big trouble since they had failed to question the practice during the previous audit. They said that they realized it was probably wrong, but they went ahead because it had been ignored in previous year and hey knew their supervisor wanted them to ignore it again this year. They didn't want to cause problems. They encouraged Sue to be a "team player" and drop the issue. Analyze each of Sue's possible courses of action, detailing the positive and negative ramifications of each alternative. What would you do if confronted with this situation? What would be the deciding factor or factors that shape your decision? Sue was puzzled as to what course of action to take. She had recently started her job with a national CPA firm, and she was already confronted with a problem that could affect her future with the firm. On an audit, she encountered a client who had been treating payments to a large number of employees as payments to independent contractors. This practice saves the client the payroll taxes that would otherwise be due on the payments if the workers were classified as employees. In Sue's judgment this was improper as well as illegal and should have noted in the audit. She raised the issue with John, the senior accountant to whom she reported. He thought it was a possible problem but did not seem willing to do anything about it. He encouraged her to talk to the partner in charge if she didn't feel satisfied. She thought about the problem for a considerable time before approaching the partner in charge. The ongoing professional education classes she had received from her employer emphasized the ethical responsibilities that she had as a CPA and the fact that her firm endorsed adherence to high ethical standards. This finally swayed her to pursue the issue with the partner in charge of the audit. The visit was most unsatisfactory. Paul, the partner, virtually confirmed her initial reaction that the practice was wrong, but he said that many other companies in the industry follow such a practice. He went on to say that if an issue was made of it, Sue would lose the account and he was not about to take such action. She came away from the meeting with the distinct feeling that had she chosen to pursue the issue she would have created an enemy. Sue still felt disturbed and decided to discuss the problem with some of her coworkers. She approached Bill and Mike, both of whom had been working for the firm for a couple of years. They were familiar with the problem because they had encountered the same issue when doing the audit the previous year. They expressed considerable concern that if she went over the head of the partner in charge of the audit, they could be in big trouble since they had failed to question the practice during the previous audit. They said that they realized it was probably wrong, but they went ahead because it had been ignored in previous year and hey knew their supervisor wanted them to ignore it again this year. They didn't want to cause problems. They encouraged Sue to be a "team player" and drop the issue. Analyze each of Sue's possible courses of action, detailing the positive and negative ramifications of each alternative. What would you do if confronted with this situation? What would be the deciding factor or factors that shape your decision?
Expert Answer:
Answer rating: 100% (QA)
Sue can either report the incident to the labor department with proof or keep quiet and continue her service in the firm without hiding the clients ac... View the full answer
Related Book For
Federal Tax Research
ISBN: 9781285439396
10th edition
Authors: Roby Sawyers, William Raabe, Gerald Whittenburg, Steven Gill
Posted Date:
Students also viewed these finance questions
-
Which of the following are not top managers? 1. Chief executive officer 2. 3. 4. Managing directors Regional managers Chief operating officer
-
After five years with a national CPA firm with mostly large manufacturing clients, Amy Kimbell joined Hi-Quality Productions Inc. (Hi-Q) as manager of Manufacturing Accounting. Amy has both CPA and...
-
Eric is a tax manager for a national CPA firm that audits Penny- Pinching Bank (PPB). Eric and his staff prepare and review the tax return for PPB. One day, at an alumni football tailgate party, he...
-
Aria Perfume, Inc.. sold 3,210 boxes of white musk soap during January of 2016 at the price of $90 per box. The company offers a full refund for any product returned within 30 days from the date of...
-
Dennis Mitchell is the plant manager of a company in northern Alabama that produces interiors for luxury yachts. The ethnicities of his workforce are mixed: about 40% are white, 25% African American,...
-
Relaxing Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Relaxing allocates overhead based on yards of direct materials. The company's performance...
-
Brian Rafferty ingested finasteride, a drug prescribed to him to treat an enlarged prostate. Finasteride is a generic version of Proscar, a drug manufactured by Merck. Some time after he started to...
-
A 10.0-m3 tank contains steam at 275C and 15.0bar. The tank and its contents are cooled until the pressure drops to 1.2bar. Some of the steam condenses in the process. (a) How much heat was...
-
Tokens are generated at a Poisson rate of 5 per second. Data packets arrive at a network entry point at a Poisson rate of 2 per second. Each packet waits to obtain a token (permit) before entering...
-
Jenny Smith, 28, just received a promotion at work. Her salary has increased to $40 000 and she is now eligible to participate in her employers pension plan. The employer matches employee...
-
Suppose you invest $10,000 at an annual interest rate of 6%, compounded quarterly, for a period of 5 years. At the end of the investment period, you decide to reinvest the principal and the...
-
In april 2010 the eyjafjallajokull volcano in iceland erupts. although it did not cover any meeting venues with lava, it did affect many meeting, especially those in certain aeras of europe at, or...
-
Hassan will receive the following payments at the end of the next four years: AED 30,000, AED 50,000, AED 40,000 and AED 60,000. Then from the end of the fourth year through the end of the ninth...
-
Agapito is entitled to receive P25,000 at the beginning of each year for 18 yrs. If money is worth 4% compounded annually. (A)What is the present value in pesos of this annuity at the time he was...
-
Your customer has contacted you to move cargo from Montreal Canada to Lisbon Portugal. Find the best suited ship to carry this cargo. Cargo Specifications: John Deer Combine Dimentions: 50ft x32ft x...
-
Friendly Financial has $135 million in consumer loans with an average Interest rate of 12 percent. The bank also has $95 million in home equity loans with an average Interest rate of 10 percent....
-
6. Aadaki doruluk tablosunun en sa stununu doldurmanz gerektiini varsayalm: p...q-p...-q..........-pv-q T.....T T.....F F.....T F.....F Yukardan aaya doru gidersek, bu stunu nasl doldururdunuz? O a....
-
A number of years ago the United Food and Commercial Workers Union organized 800 workers of the 1035 employees at one of the Wilson Brothers food operations in Toronto, Ontario. The employees include...
-
Eighty percent of the Willigs AGI comes from their submarine sandwich shop operated as a sole proprie-torship. In 2014, the Willigs lost an IRS audit and owed $ 12,000 in 2012 federal income taxes,...
-
What is a case headnote? How might it be useful to the tax researcher?
-
What are KeySearch and the West Key Number System?
-
You have learned the importance of making sure that requirements are correctly identified. Hut how do you know when you have a correct requirement-that is, what criteria must each requirement meet in...
-
Prepare a full feasibility analysis, including Economic, Operational, Schedule, Legal, and Technical analyses for the system you are suggesting in problem 1. Your analysis should be no more than 30...
-
Complete the following sentences: A critical part of designing the deciding how to distribute the system's data. and to different Databases are a resource typically. by many- future. In designing for...
Study smarter with the SolutionInn App