Ethical Dilemma: Audit Report on Jon William's Actions, University

This report examines the ethical dilemma faced by Jon William, an auditor of Oneway Corporations, where he encounters a conflict of interest due to personal relationships and professional responsibilities. The case involves a share sale among company directors, with William's tax client, Raul Jack, seeking to sell his shares, while his friend, Chris Barnes, opposes the decision. As an auditor, William must adhere to the American Institute of Certified Public Accountants (AICPA) Codes of Professional Standards, including Responsibilities, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of Service. The report analyzes how these ethical codes apply to William's situation, emphasizing the importance of objectivity, independence, and maintaining client confidentiality. It advises William to act with integrity and provide correct taxation advice while complying with AICPA standards, avoiding conflicts of interest. The report highlights the significance of ethical conduct in the auditing profession and the need to prioritize public interest over personal relationships or potential financial gains.

Running head: AUDIT
Audit
Name of the Student
Name of the University
Author’s Note

1AUDIT
Table of Contents
Alternative Action of Jon William.............................................................................................2
References..................................................................................................................................5

2AUDIT
Alternative Action of Jon William
It can be seen from the provided case study that, Jon William is the auditor of
Oneway Corporations that has three directors and each of them owns one-third of the shares
of the company; these directors are Raul Jack, the founder; Sandra Smith, the vice-president;
and Chris Barnes, the treasurer. As per the case, Raul Jack wants to sell his part of the
company share to Sandra Smith, and Chris Barnes is against the decision as it will make him
make him minor in the company’s share. Since Jon Williams is the auditor of the company,
he is facing ethical dilemma as Raul Jack is his tax client and Chris Barnes is his close friend.
In United States (US), it is the prime responsibility of the auditors of the companies to
comply with the ethical principles and standards of American Institute of Certified Public
Accountants (AICPA) Codes of Professional Standards at the time to conduct the audit
operations. According to AICP Codes of Professional Standards, there are six ethical codes
that the auditors are needed to comply with; they are Responsibilities, the Public Interest,
Integrity, Objectivity and Independence, Due Care, and Scope and Nature of Service. The
present situation can be solved with the help of these ethical codes (Jefrey, 2018).
It can be seen from the provided situation that Jon William is facing certain ethical
dilemma while making the correct audit decision in the provided situation due to the fact that
he must comply with the principles and standards of AICPA Codes of Professional Standards.
It can be seen from the provided case that Jon William is facing ethical dilemma in
the presence of the fact that he does not have a good relation with Sarah and she is not his tax
client. In this case, in case Sandra Smith becomes the holder of majority portion of
company’s share, there is a possibility that Jon William will not get the audit contract.
However, as per the principle of the Public Interest of AICPA, the auditors are needed to
accept the obligation to act in the interest of public and thus, should ignore any kind of

3AUDIT
personal interests through providing the professional services (Savage, Cerf & Barra, 2013).
Thus, in this position, it is needed for Jon William to ignore about the audit contract while
making the correct audit diction due to the obligation on them from AICPA. For this reason,
it is needed for Jon William to act in the most integrated manner for avoiding any kind of
ethical violations (Sellers, Fogarty & Parker, 2015).
At the same time, it can be also be seen from the provided case study that Jon William
has a good relation of friendship with Chris Barnes and thus, Jon William is concerned about
the situation that Chris Barnes is facing. Moreover, Chris Barnes asks Jon William to provide
him with the information about the deal of Raul Jack. In this situation, it is needed to mention
about the Integrity principle of AICPE where it is mentioned that it is the obligation on the
auditors to maintain the confidentiality of the business information of the audit clients
(Sabău, Şendroiu & Sgârdea, 2013). It implies that the auditors do not have the right to
disclose the business information of the audit clients in the absence of any approval. Based on
this code of ethics, it can be said that Jon William should not provide any deal related
information to Chris Barnes about Raul Jack as this will lead to the violation of the ethical
code of AICPE (Toy & Hay, 2014).
Moreover, it can also be observed that Jon William is concerned about the ending of
his close friendship with Chris Barnes in case he is unwilling to provide the information to
Chris Barnes. However, accounting to the AICPE principles of Objectivity and
Independence, there needs to be the assessment of the relationship between the auditor and
the client in order to maintain objectivity and independence requirements of the audit
profession. For this reason, it is needed for Jon William to act in the most objective manner
so that he can be free from any conflict of interest while discharging the professional services
(Mintz, 2014).

4AUDIT
On the basis of the above discussion, it is advised to Jon William that he should
perform his professional duties in the most honest and integrated manner while complying
with the codes of standards of AICPE. Hence, the correct action for Jon William will be to
provide the correct taxation advice on the tax planning of Raul Jack by complying with the
standards of AICPE.

5AUDIT
References
Jefrey, C. (Ed.). (2018). Research on professional responsibility and ethics in accounting.
Emerald Publishing Limited.
Mintz, S. (2014). Revised AICPA Code of Professional Conduct. The CPA Journal, 62-71.
Sabău, E. M., Şendroiu, C., & Sgârdea, F. M. (2013). Corporate antifraud strategies–Ethics
culture and occupational integrity. CrossCultural Management Journal, (29), 333-
339.
Savage, A., Cerf, D. C., & Barra, R. A. (2013). Accounting for the public interest: A revenue
recognition dilemma. Issues in Accounting Education, 28(3), 691-703.
Sellers, R. D., Fogarty, T. J., & Parker, L. M. (2015). The center cannot hold: The AICPA
and accounting professional leadership 1997–2013. Accounting Horizons, 29(3), 485-
506.
Toy, A., & Hay, D. C. (2014). Privacy auditing standards. Auditing: A Journal of Practice &
Theory, 34(3), 181-199.