1. What do you think was the motivation for Cubbies Cable in taking the position to expense...

Question:

1. What do you think was the motivation for Cubbies Cable in taking the position to expense all cable costs during the year ended September 20, 2013? Would you characterize the position as an attempt to manage earnings? Why or why not?
2. Who are the in this situation? Identify the major ethical issues that should be of concern to Binks in deciding whether to just go along with the firm in its support of the client (based on Hondley’s position) or support the position of the audit manager. What would you do at this point if you were in Binks’s position? Why?
3. Do you think it is ethical for CPAs to “horse trade” when negotiating with a client about the proper to apply in a particular situation? How does such negotiating relate to the accepted auditing standards of the AICPA and PCAOB discussed in Chapter 5?

Stakeholders
A person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees,... GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...