Finance Homework Week 4 Ethical Dilemmas Facing Cpas
Courteney McCormick
12/20/2018
Academic Scholarship
I have chosen an article about dilemmas a CPA may face. In the article, several dilemmas are listed. First, there is one about a divorcing couple. Since the CPA has been their accountant for a long time, he isn’t sure that he can distribute finances evenly because of his friendship with the husband. Since the husband and wife cannot come up with how they would like to distribute things, it is left in the hands of attorneys. When Andre starts preparing all of their financial papers, the husband sends him a text along the lines of “I am not sure what my ex is going to do but she needs to figure it out, you are my advocate, not hers.” Andre is confused because he was an advocate for both. In this situation he needs to step back from one or both parties and let someone else take care of their finances. His personal relationships have gotten in the way of his business and he needs to step back so no one can claim that he skewed either side of finances.
The next dilemma, a CPA faces two business partners. One partner owns 70% of the company, the other 30%. The majority owner asks the CPA to “get creative” while preparing some documents. Basically, she wants her to lie so she can profit some money. When the CPA asks what she means, she finds out the majority partner has some serious large debts and is trying to cover some of her personal expenses. In this situation, the CPA should not change any numbers or make any changes to the financial reports. Instead, she could take a look at the majority owners personal finances and offer her some advice on how to work on her debt problems with her personal finances.
The last ethical dilemma presented in the article is about a CPA that finds out some information about an employee on of his clients hired while going through some finances. Steve is a CPA for a small dental business, the dental company hired a new office manager, Josephine Smith. Steve recognizes this name and realizes that she was let go from a job at a pediatrician’s office he also does finances for because she stole quite a bit of money. Steve is now faced with an ethical dilemma, if he tells the dental office about Josephine’s past, he could get into some legal trouble because the pediatrician office never filed charges therefore, her criminal activity isn’t public knowledge. But, if he doesn’t tell them, the dental office is at risk of having money taken from them as well. In this particular case, it is best that Steve withholds the information about the new employee and keeps a close eye on finances so that if she steals again, he will be able to catch it.
Another ethical dilemma a CPA could face is elder abuse. If a CPA is working with and elderly person and during confidential meetings finds evidence, it can be hard to prove without using the information that is private. In this case, the CPA would either have to sweep elder abuse under the rug, or risk using confidential items as evidence against the person or company abusing the elderly.
In this case, the CPA should meet with a lawyer and provide him with the evidence so that the lawyer can do his job. The CPA would then not be breaking any confidentiality rules or allowing the elderly abuse to continue. It would be important to work closely with the lawyer and is older client to provide substantial proof so that he can protect his client.