+1 (208) 254-6996 [email protected]
  

Please see attach 

Question: Doolittle LLP, a CPA firm, has been doing financial statement auditing for Honesty Corp. for the last 10 years. While auditing last year’s financial statements of Honesty, Doolittle finds out that Honesty has overstated assets by 12 percent and revenues by 19 percent to make up for the huge losses it incurred. When Doolittle informed the management of Honesty about this illegal act, Honesty’s management threatened to cancel Doolittle’s contract with Honesty and demanded back the corporate records and working papers from Doolittle. Should Doolittle give them back? Who owns them? Who has right of access to them? If Doolittle is forced by Honesty to destroy those papers, under which act can Doolittle be punished? Does the AICPA Code of Professional Conduct address this type of situation? If so, identify and provide a summary of that portion of the AICPA Code of Professional Conduct.

Don't use plagiarized sources. Get Your Custom Essay on
4
Just from $13/Page
Order Essay

Your initial post should include evidence that supports your decision.

To participate in follow-up discussion, refer to the AICPA Code of Professional Conduct and summarize an item that is considered an act discreditable and compare your findings to that of a classmate.

Follow-up discussions to classmates’ initial responses should integrate course theories with a practical application of the subject; offer a personal observation or experience; reference real-world examples, current events; or present current research on the topic that encourages further discussion and ongoing dialogue with other students and the instructor in the class.

PLEASE RESPOND TO THE TWO BELOW:

Virginia Montes

1 posts

Re: Topic 4 DQ 2

According to the U.S. Securities and Exchange Commission, “Retention of Records Relevant to Audits and Reviews” Section 802 if the Sarbanes-Oxley Act of 2002, “requires accountants who audit or review an issuer’s financial statements to retain certain records relevant to that audit or review. These records include workpapers and other documents that form the basis of the audit or review, and memoranda, correspondence, communications, other documents, and records (including electronic records), which are created, sent, or received in connection with the audit or review, and contain conclusions, opinions, analyses, or financial data related to the audit or review. The rule requires that these records be retained for seven years after the auditor concludes the audit or review of the financial statements.” This means that all corporate records used as part of the audit or review belong to Doolittle LLP audit firm.

This section 802 of the SOX act of 2002 also prohibits the alteration, destruction, cover-up or falsification of any document with the intent of fraud or to obstruct any investigations. In other words, Doolittle LLP will be accused of a crime if they decide to destroy any of the documents.

As an audit firm, they are also responsible to comply the AICPA Code of Professional Conduct. This situation is addressed in several sections of the AICPA. First in section 0.300.020 Responsibilities: it states that accountants must carry their responsibilities with professional and moral judgments in all their activities. In sections 0.300.030 The Public Interest: it says that members of the AICPA have accepted the obligation to act in a way that will serve the public interest, honor the public trust. The public includes clients, credit grantors, governments, employers, investors, the business and financial community. Therefor Doolittle has the obligation to include its finding of the overstated assets and revenues, this is a misrepresentation of financial information on behalf of Honestly, since these financials can be used for loans, credit applications, to obtain investments. Also, section 0.300.040 Integrity, and section 0.300.050 Objectivity and Independence, which give Doolittle very clear guidelines of ethical behavior. Finally, 1.100.001 Integrity and Objectivity Rule, which says in the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.

Doolittle LLP has protection under the SEC, and they are help up to the standards of the Code of professional conducts.

References:

AICPA Code of Professional Conduct, (2014) Retrieved from https://pub.aicpa.org/codeofconduct/Ethics.aspx#

U.S. Securities and Exchange Commission (2021) Final Rule: Retention of Records Relevant to Audits and Reviews. http://www.sec.gov/rules/final/33-8180.htm

Andrew Dunn

1 posts

Re: Topic 4 DQ 2

It is the Responsibility of an Auditor to perform its work with professional Competency and skepticism and he should always keep in Mind that members should proceed with their responsibilities, and keep the public interest in mind in their decisions. He should perform his audit according to planned procedures and due diligence and with integrity, he should maintain objectivity and independence and prevent any conflicts of interest in their practice.

The responsibility of maintaining the records of the company lies with the management and they they have every right on the financial statements, however under the corporate act it provides an Auditor to access to the records of the company anytime to form an opinion on the Completeness and True and fairness of financial statements and the Responsibilities and Functions of the Independent Auditor, states, “The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. they are free from any material misstatement, and that the records have been prepared following the Generally Accepted Accounting Policies and they present the fair and true image of the company’s financial position. this section establishes requirements and provides direction relevant to fulfilling that responsibility, as it relates to fraud, in an audit of financial statements. auditor should return the original financial statements and he has to inform the appropriate authority to act upon this” (Default, 2021). Identifying and Assessing Risks of Material Misstatement, establishes requirements regarding the process of identifying and assessing risks of material misstatement of the financial statements. The Auditor’s Responses to the Risks of Material Misstatement, establishes requirements regarding designing and implementing appropriate responses to the risks of material misstatement. Evaluating Audit Results, establishes requirements regarding the auditor’s evaluation of audit results and determination of whether he or she has obtained sufficient appropriate audit evidence.

References:

AU Section 110 – Responsibilities and Functions of the Independent Auditor. Default. (n.d.). https://pcaobus.org/oversight/standards/archived-standards/pre-reorganized-auditing-standards-interpretations/details/AU110.

Tuovila, A. (2021, May 19). Generally Accepted Auditing Standards (GAAS). Investopedia. https://www.investopedia.com/terms/g/gaas.asp#:~:text=Generally%20accepted%20auditing%20standards%20(GAAS)%20ar

Order your essay today and save 10% with the discount code ESSAYHELP