Jen Walters, a member, is controller of Usher Company. Grey & Grey, CPAs are the auditors...

 

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Jen Walters, a member, is controller of Usher Company. Grey & Grey, CPAs are the auditors of Usher Company. On the last day of the field work of the Usher Company audit, Robert Wright, the manager of the audit team asks Jen Walters if she is aware of any additional items that have not been disclosed to the auditors that could have a material effect on the financial statements. Jen Walters says she is not aware of any such items. Jen Walters, however, knows the cost of some major repairs to one of their plants has not been paid and the accounting department has not yet received an invoice for that work. She suspects that the president of the company is holding the invoice and will continue to do so until after the current year's audit is completed. The repairs to the plant were completed a couple of months ago and the cost of them would have a material effect on the current year's earnings. Since Jen Walters' statement to Robert Wright was a general one, i.e., she was not aware of any undisclosed items, and it was not in writing, Jen Walters has not violated the Code of Professional Conduct. Since the Code of Professional Conduct applies only to members in the practice of public accounting, its rules do not apply to Jen Walters. The Code of Professional Conduct does not cover this type of situation. Jen Walters has violated the Code of Professional Conduct by failing to disclose to Grey & Grey, CPAs the unrecorded liability for the repair work. Jen Walters, a member, is controller of Usher Company. Grey & Grey, CPAs are the auditors of Usher Company. On the last day of the field work of the Usher Company audit, Robert Wright, the manager of the audit team asks Jen Walters if she is aware of any additional items that have not been disclosed to the auditors that could have a material effect on the financial statements. Jen Walters says she is not aware of any such items. Jen Walters, however, knows the cost of some major repairs to one of their plants has not been paid and the accounting department has not yet received an invoice for that work. She suspects that the president of the company is holding the invoice and will continue to do so until after the current year's audit is completed. The repairs to the plant were completed a couple of months ago and the cost of them would have a material effect on the current year's earnings. Since Jen Walters' statement to Robert Wright was a general one, i.e., she was not aware of any undisclosed items, and it was not in writing, Jen Walters has not violated the Code of Professional Conduct. Since the Code of Professional Conduct applies only to members in the practice of public accounting, its rules do not apply to Jen Walters. The Code of Professional Conduct does not cover this type of situation. Jen Walters has violated the Code of Professional Conduct by failing to disclose to Grey & Grey, CPAs the unrecorded liability for the repair work.

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