Giving Voice to Values: Ethical Dilemma in Accounting Case Study

This case study analysis focuses on the 'Giving Voice to Values' framework, applied to a scenario at Ryan & Associates, a CPA firm. The case involves Steve, an employee, who discovers a potential ethical conflict of interest regarding a new associate, Abby, assigned to audit work she previously performed as a book-keeper. The analysis examines the ethical implications of Abby's involvement, the potential impact on auditor independence, and the arguments for and against her participation. It explores what Steve should communicate, to whom, and how, along with the key arguments, stakeholders' interests, and persuasive responses to influence those who disagree. The solution provides a detailed plan, including how to address the situation, mitigate risks, and uphold professional ethics, while also considering the potential consequences and the importance of maintaining the firm's reputation. The analysis concludes with a strong recommendation on how to handle the situation, emphasizing the need for an independent audit and highlighting the potential risks associated with an auditor auditing their own work.

Giving Voice to Values
Title
Assignment Name
Student Name
Course Name and Number
Professor
Date
1

Giving Voice to Values
Table of Contents
What should you say, to whom, when and how?...................................................................................3
What are the main arguments - reasons and rationalizations to be addressed?......................................3
What is at stake for the key parties (including those who disagree with you)?......................................3
What arguments could be used to influence those with whom you disagree?........................................3
What is your most powerful and persuasive response?..........................................................................3
2

Giving Voice to Values
What should you say, to whom, when and how?
Steve should inform Marcia, the Managing Partner that the work which has been assigned to
Abby, the new associate for auditing was done by her in the capacity of book-keeper at her
previous organization (Helping Our Children). He must inform Marcia at the outset and not
start the audit work with Abby. ("Auditor Independence at the Crossroads – Regulation, and
Incentives", 2012)He should do the same verbally in a meeting with Marcia.
What are the main arguments - reasons and rationalizations to be addressed?
The significant reason that Abby cannot perform the audit is that it is her work (during
previous employment), which will clout her professional judgment. She is the one created the
books and entered details of the transactions in them. So if there is any discrepancy, she
might not even point it out or not even notice (Anandarajan, Kleinman & Palmon, 2008).
What is at stake for the key parties (including those who disagree with you)?
i) The professionalism and ethics of Ryan & Associates will be questioned if the
audit is conducted by an auditor who has a conflict of interest and is not
independent.(Blay & Geiger, 2012)
ii) Marcia being the Managing Partner will be questioned for her judgment to
delegate the work to Abby as she must be aware of her previous employment
details when she interviewed her or appointed her in the firm as an associate.
iii) There has already been a delay in conducting the audit due to the previous project
and hectic schedule. However, it does not mean that the fundamental auditing
principles are compromised to meet the deadline.
What arguments could be used to influence those with whom you disagree?
i) An auditor cannot audit his own work.
ii) Extension of time may be sought for the delay in delivering the audit report,
instead of providing an ethically and professionally wrong report conducted by an
incompetent auditor.
What is your most powerful and persuasive response?
In my opinion, if Abby (the new associate) works even as my junior to audit her own work, it
will not be an independent audit. She is not competent to audit this project.
Such an audit (by interested person) could raise eyebrows and cause concerns to the
reputation of any work conducted by Ryan & Associates. (Bédard & Paquette, 2010)
Instead of Abby working with me on this project, I would rather delegate other work to her
and complete this work on my own at the earliest.
3

Giving Voice to Values
REFERENCES:
Anandarajan, A., Kleinman, G., &Palmon, D. (2008). Auditor independence revisited: The
effects of SOX on auditor independence. International Journal Of Disclosure And
Governance, 5(2), 112-125. doi: 10.1057/jdg.2008.3
Auditor Independence at the Crossroads – Regulation and Incentives. (2012). European
Business Organization Law Review, 13(01), 89-101. doi:
10.1017/s1566752912000043
Bédard, J., & Paquette, S. (2010). Perception of Auditor Independence, Audit Committee
Characteristics, and Auditor Provision of Tax Services. SSRN Electronic Journal. doi:
10.2139/ssrn.1084099
Blay, A., & Geiger, M. (2012). Auditor Fees and Auditor Independence: Evidence from
Going Concern Reporting Decisions*. Contemporary Accounting Research, 30(2),
579-606. doi: 10.1111/j.1911-3846.2012.01166.x
4