Question 1

CPAs who provide accounting, taxation and related services to all businesses must bear the responsibility of serving as the moral conscience of their clients. From an ethical perspective, an accountant has the responsibility of seeing that financial statements are fairly presented and that those statements reflect economic reality. Accountants are thus ethical detectives holding business to ethical standards of completeness, honesty, representational faithfulness and neutrality. Thus, CPAs should always be keen to observe any unethical behavior of their client and should be ready to explain to them the consequences of their behavior. Investors, creditors and other stakeholders rely on the integrity of accounting information in corporate financial statements. Therefore, CPAs should try their best to provide credible and reliable information to the public. Ethics is an essential element of the accounting professional as this professional is supposed to serve the public interest. Francis, states that accounting is a profession which is entirely ethical in nature. Dolfsma further asserts that accounting is applied ethics.
The whole purpose of this argument is to urge the CPAs to possess a high degree of professional integrity, acting in a competent and reliable manner. If the clients misconduct, they will destroy the reputation of the CPA career and thus it is very critical for them to act accordingly and ethical. These clients will only understand the consequences of their misconduct if the CPAs explain to them what is wrong. This clearly indicates that it is the responsibility of the CPAs to control the behavior of their clients towards their career. One way CPAs can enhance their value is by serving as a moral conscience for their clients. If CPAs are suspicious of their client’s behavior, they should make efforts to meet those clients and assess the situation. It is very beneficial to the client and the CPA if the CPA devotes time to the client in rectifying misconducts.

Question 2

Auditors have a professional responsibility to report clients’ who are issuing false statements concerning their taxes or ignoring other laws. More so, auditors have a vital role in serving their clients and the public. Even if the auditor has worked for a client for many years, they have to treat each situation as a new account and proceed with a certain degree of professional skepticism. Auditors have to assume that cheating or violating laws can happen at any time with any client. Therefore, it is their responsibility to identify cheating and decide on the action to take depending on the level of the cheating. Auditors have no control over the information that is presented to them, there is plenty of room for dishonesty and thus they should not spare their client if they find any form of cheating. Auditors are trained to detect tax fraud, which is a form of tax dodging and this clearly indicate that it is their responsibility to report any fraud they might detect without favor or compromise. Some examples of what auditors find are a business with two sets of books, no receipts, and checks that have been altered to increase revenue. The Internal Revenue Manual instructs auditors who suspect their clients of tax fraud to contact the IRS criminal investigation division.

Question 3

If I were Jess, I would turn down my friend’s offer to become an informant for the IRS. As an auditor, if I suspected that my client is cheating on taxes or any other violations of the law, I would consult my client on their behavior and advise how the wrong doing could be corrected. I believe in investing in relationships. There may be a chance the owner is unaware of the crime being committed. Maybe it is someone within the organization who is committing the crime that the owner may not know of. In this scenario, I would help my client by bringing this crime, which could cost him money and potential criminal charges, to light. On the other hand, if the owner knew of the crime and still refused to rectify the situation, I would have to report the crime to the IRS, but not as an informant. I would have to face my family and accept the terms of my own punishment if the IRS could prove the case against me. With the Checksfield case, he became an informant for the IRS and lost his job as well as his certificate. The risks of doing more harm to me and my career are higher by becoming an informant.
If I became an informant to the IRS, my family, job, and client would be affected. I would be placing myself in the position of public scrutiny and also be taking the chance of losing my livelihood. I would definitely lose the respect and trust of my. My CPA license would be revoked and finding another job in my profession would be practically impossible. Although the IRS would clear my slate as far as my obligations to them and present me with a monetary award, I would still lose my job and career. My family then would suffer because I would not be able to adequately provide for them. Last but not least, my client would be affected. They would probably have criminal charges brought against them and would feel betrayed by me, a professional that they trusted.

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