Case 5.2 Aig

1. Is it estimable for a certified public accountant or certified public accountant immobile to foster companies bonk their reported earnings and financial considerateness? First copy that the certified public accountant or certified public accountant steadfastly is portion as a consultant, and then assume that the certified public accountant or certified public accountant unwavering is serving as the disposed(p) entitys independent tender. Defend your answers. In my opinion, it is not ethical for a CPA or CPA squiffy to help companies practice their reported earnings and financial condition. The framework of estimable think comprises five parts: Opinion, self- gratify, consequence, duty, and character. This framework can help us better analyze this matter. First, opinion puts self-interest p benthesis to recover into this matter. If a CPA or CPA tight runner serves as a consultant then as the give entitys auditor, it is auditing its own work. In that way, nobody else is really expiration to check whether a certain accounting intercession is conformable with GAAP. Different opinion resulted from different understanding more or less an issue would not be raised. Moreover, generally speaking, military man beings are reluctantly to admit their mistakes. The CPA or CPA firm would at least have reputational interest in the financial report that it managed. This human nature leave alone foil the CPA or CPA firms independence, and will minify the reliability of the audit report.

Second, self-interest focuses on the interest of ending makers. The CPA or the indivi dual partner of the CPA firm would probably ! increase his own compensation by serving as both the entitys consultant and auditor. On the otherwise side, for the entity, hiring the same firm as both consultant and auditor can save it audit expense, since the CPA or CPA firm has already known a cope well-nigh it when realizeing consulting, thus decreasing its audit hours. For example, in the case, afterwards receiving the copy of SAS No.50 report, E&Y did not run any meaningful separate analysis in ending making that the SPE accounting treatment of PNC was acceptable. Third, consequences focus on the interest...If you wishing to father a full essay, order it on our website: BestEssayCheap.com

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