To Tell or Not to Tell: An Auditing Case in Ethical Decision Making and Conflict Resolution

This case requires you to resolve a fictitious yet realistic ethical dilemma as you assume the role of audit manager in a large, national CPA firm. You will be presented with a scenario whereby you learn from the CFO of Bell Manufacturing, an audit client, that the CFO entered the United States and worked a number of years under false pretenses for the audit client while he was an illegal alien. Although the CFO recently obtained U.S. citizenship, subsequent audit work revealed that Bell Manufacturing failed to obtain the documents required under federal law to certify his eligibility for employment. Before addressing specific case requirements, you will be introduced to a primer on professionalism and ethical decision making in an audit environment. Case requirements first ask you to establish a baseline position by outlining your initial reaction regarding the impact of this information on your auditor responsibilities. You will then be asked to electronically search the authoritative literature covering illegal acts by a client, as well as standards on fraud and the Code of Professional Conduct. After researching the issue, you will be asked to write a memo to the audit partner detailing your recommendation for resolution of this issue. Completion of this case will contribute to development of your ethical, analytical, research, and communication skills, better preparing you for practice and the new CPA exam.