Accounting Theory and Contemporary Issues- Doc

Running head: ACCOPUNTING THEORY AND CONTEMPORARY ISSUES
ACCOUNTING THEORY AND CONTEMPORARY ISSUES
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1ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Table of Contents
Answer 1..........................................................................................................................................3
Answer 2..........................................................................................................................................4
Answer 3..........................................................................................................................................5
Answer 4..........................................................................................................................................6
Answer 5..........................................................................................................................................6
References........................................................................................................................................8

2ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Answer 1
Professional Scenario
The case study shows that Johnny is in-charge of audit engagement of this ABC
Company. The PCAOB (Public Company Accounting Oversight Board) would be arriving this
entity to examine work papers of audit (Beasley 2015). The manager of this entity requested
Johnny about the version of audit papers from file room. It has been found out that audit paper is
incomplete because two of the main documents including- item worksheet and version of signed
engagement letter. As per request of manager, Johnny obtained the clients signature without
revealing original insertion date. The auditing principle that is violated in this case is objectivity
principle. As per objectivity principle, the auditors of the enterprise are required to exhibit
greatest extent of the professional objectivity in evaluating and communicating the information
concerning the activities of auditing. In this condition, it has been seen that Johnny actions to
submit audit papers is influenced by the manager. Hence, Johnny is not independent that violates
objectivity principle.
Student scenario
The given case study reflects that Mary and Samantha are the two friends studying in an
institution. Mary lacks in accounting subject and hence there is a chance that Mary may not
attain pass marks in exam. Owing to this, Samantha suggested Mary to study from test banks.
Mary downloaded this study guide from website where it had been stated that this books are for
instructors use. Mary ignored this statement and used it to attain high marks in examination. This
case highlights that ethical principles have been violated which comprises of fairness, honesty
and legality (Cameron and O'Leary 2015). Since Samantha had given unethical suggestion to

3ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Mary for using test banks, fairness principle is breached as it cities that equality must be ensured
in each process. Mary adopting shortcut for obtaining high marks indicates violation of honesty
principle, which cites that people must be truthful by assuring personal honesty in learning
(Christensen, Cote and Latham 2016). As Mary ignored the notification given in website about
the books, it breaches legality principle which cites that legal norms mainly relates to copyright
for regulating accessibility to research resources. However, if institution overlooks Mary’s
misconduct, then she will be authorized for maintaining integrity of the institution.
Answer 2
Professional Scenario
The main stakeholders in this case involve- ABC entity, manager of this entity and
PCAOB. As two main papers were missing from final file, it might have influenced accounts
book of entity. It had been recognized that supporting file of the main item was missing. Suppose
if it is revenue, then this entity’s management may have a look on section wise revenue attained
from every business subsidiary (Scott 2015). However, if proper information is not given then
questions might be raised as per given financial information. Since Johnny carried out all
activities, manager was the main stakeholder in this case. Although supporting file was lost,
Johnny had electronic version of this paper. This was reprinted at manager’s direction but no
clarification about this papers were given at inclusion time. Johnny included client signature but
he did not mention actual date of inclusion. Thus, he may be warned or terminated due to such
irresponsible behavior.
Student scenario

4ACCOUNTING THEORY AND CONTEMPORARY ISSUES
The stakeholders in this case are Samantha, Mary and the institution where they are
pursuing studies. It can be seen that Mary has used test banks as advised by Samantha for
securing high marks in examination. Now if the institution found out that Mary had used this test
banks to prepare for exam, it might have negative impact on her personal career. This adverse
impact might change from short term suspension to long term suspension from institution
(Tormo-Carbó, Seguí-Mas and Oltra 2016). It can be predicted that if Mary confesses to
management of institution that Samantha advised her to use this test banks, then Samantha might
also be punished by institution. Moreover, as Mary did not follow rules of institution, academic
integrity will be breached and hence this institution may impose strict actions on both of them.
Answer 3
Professional Scenario
This case shows that Johnny being senior of audit team, the members working under him
will carry out initial audit work. After completion of audit work, the final file was handed over to
this entity. But the manager of this entity lost the file, for which he asked for extra copy. In this
condition, if Johnny says that actual report was given to the entity and loss of this final report is
mainly because of manager’s negligence, then Johnny’s behavior might be rationalized.
Student Scenario
In this case, Mary downloaded test banks for attaining high marks in examination as per
the advice of her friend. Now for rationalizing the behavior, Mary could inform institution that
test banks had been used as reference and this aided her to improve her knowledge. Also, it
facilitated her to attain better results in exam and enhance her career.

5ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Answer 4
Professional Scenario
It has been observed from this scenario that although supporting file was lost, electronic
version of this file was available to Johnny. Johnny reprinted this file at manager’s direction but
no clarifications were included in this final file. Furthermore, even though Johnny included
original signature of client, actual inclusion date was absent from the file. Therefore, ot is
recommended that Johnny could have said the management about the details of the present
condition. Moreover, he should have controlled him to manipulate the documents to keep
professional integrity.
Student scenario
It is recommended that Mary should have avoided referring test banks and also should
have advised Samantha for not using this while studying for final exam (Fiolleau and Kaplan
2017). Thus, this act would make certain about ethical integrity of the educational institution.
Answer 5
Professional Scenario
After disclosure of the act, the factors that contributed to Johnny’s silence are discussed
below:
 Manipulations had been done while revealing the item without mentioning any proper
justification about delayed inclusion (Rankin et al. 2012).
 Since Johnny has acted according to the mangers direction and interest, this should assure
personal interest.

6ACCOUNTING THEORY AND CONTEMPORARY ISSUES
 Johnny had met with this entity’s clients, which reflects violation of independence
principle.
In this situation, Johnny should provide information to this entity’s management about the
fact that his action was according to his manager’s direction.
Student Scenario
After disclosure of Mary’s act, the factors that contributed to Mary’s silence are :
 It has been wrongly certified that Mary had obeyed norms of the institution
 Mary used test books that this institution students were not permitted to use
 Mary’s confession to management of the institution may have negative effect on
Samantha’s career.
This, Mary could avoid using this test banks and could also suggest Samantha to avoid this
practice.

7ACCOUNTING THEORY AND CONTEMPORARY ISSUES
References
Beasley, M.S., 2015. Auditing cases: An interactive learning approach. Prentice Hall.
Cameron, R.A. and O'Leary, C., 2015. Improving ethical attitudes or simply teaching ethical
codes? The reality of accounting ethics education. Accounting Education, 24(4), pp.275-290.
Christensen, A.L., Cote, J. and Latham, C.K., 2016. Insights regarding the applicability of the
defining issues test to advance ethics research with accounting students: A meta-analytic
review. Journal of business ethics, 133(1), pp.141-163.
Fiolleau, K. and Kaplan, S.E., 2017. Recognizing ethical issues: An examination of practicing
industry accountants and accounting students. Journal of Business Ethics, 142(2), pp.259-276.
Rankin, M., Ferlauto, K., McGowan, S.C. and Stanton, P.A., 2012. Contemporary issues in
accounting. Milton, Australia: Wiley.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Tormo-Carbó, G., Seguí-Mas, E. and Oltra, V., 2016. Accounting ethics in unfriendly
environments: The educational challenge. Journal of business ethics, 135(1), pp.161-175.