While evaluating this case, the ethical dilemma is whether Daniel Potter should follow ethical guidelines or just follow his boss instructions. We will be evaluating many factors as well as what events led to this dilemma. We will also find a solution to this dilemma. Daniel Potter (Don) “he studied the code of ethics of the American Institute of Certified and had thoroughly familiarized himself with his profession’s guidelines morality” (Brook, 2007, pg.285).
He also believed that “every independent auditor was obligated to maintain professional integrity, in which he believes to be the best economic system in the world (Brooks, 2007, Pg. 285). Don is an accountant for Baker Greenleaf, this company is “one of the Big eight accounting firms” (Brooks, 2007, pg.285). Baker had a special assignment in which they chose the best people on the job, and Don was part of the team to do the audit. Don was going to work under Oliver Freeman while doing the audit. His helper Gene Doherty had told Don that he had work with Oliver before and that he was a strict authoritarian and very inflexible man.
Dan finished the audit three days before it was due and submitted the files to Oliver so he can review them. When Don was doing the audit he came across a few problems in which he found solutions for them except for one account. The one he could not find a solution for was one of the Sub’s largest real estate properties. The problem with this large real-estate was “valued on the balance sheet a $ 2 million and Don’s own estimate of its value was no more than $100,000” (Brook, 2007, pg. 286).
“Dan based his value estimate on the condition, location, and how long the property had been vacant. He approached the managers of the subsidiary with a proposal to write down the value of the property by 190,000 (Brook, 2007, pg. 286). But, the manager refused to write down its value because he felt that the property was going to be rented very soon. Dan knew the regulations of the American Institute of Certified Publi9c Accounts in which it’s states that if there is a difference of opinion between the client and the person doing the audit that affects the net income by more than 3% then it was consider material had to be disclosed in the Certified Public Account opinion ((Brooks, 2007, Pg. 286-287)
Dan did submit the report to Oliver with the recommendation that it would be filed with a subject to opinion. Oliver Freeman reviewed the report and sends Dan a list called “To Do’s,” which it was normal for Baker Greenleaf Company. In this list Oliver asked of Don to remove the files referring to the property of 100,000, Dan expressing of opinion, to remove “subject to opinion” and to change it to “clear opinion” (Brook,2007). As soon as Don reviewed what Oliver Freeman had sent him, he immediately answered him back. He replied by letting Oliver know that he was not going to alter anything on the assessment since it is violating his own reading of accounting regulation (Brooks, 2007).
Once Oliver read Dan’s reply they both meet behind closed doors. Then Oliver made it clear to Dan that he did not wanted any problems with the audit and he also claimed the he knew what was better to take care of the problem since he has been doing it for six years (Brooks, 2007). At this point Dan told Oliver Freeman “Any neglect of his duties would be viewed as an act of irresponsibility” (Brooks, 2007, pg. 287). Oliver response was that no one would even read the financial stalemates. Dan knew how important an audit can be and he did not like the idea of providing a fake statement, he knew that if he would provide “a false audit might not benefit Baker Greenleaf or himself” (Brooks, 2007 287). Oliver did let Dan know that he was jeopardizing the account and creating a bigger problem for them.
Days later Dan discovered that Oliver had changed his report and had changed it to a clean opinion and he also gave Dan a negative evaluation on the audit. Dan knew that he had the “right to report the incident to his partner counselor or to the personnel department, but was not terribly satisfied with either approach” (Brooks, 2007, pg. 287). Dan would have preferred to take his problem to an independent review bard but Baker Greenleaf did not have one and if he does not reported it, his name would stay on the file.
The two stakeholders in this case would be Baker Greenleaf and Dan. In Dan’s case I believe that he was doing the correct thing by reporting that the subsidiary company was giving the wrong value on the property and it should be corrected. I also think that Oliver did the wrong thing by removing the information that Dan had put on the report because the company as well as Dan would be liable for what the report states. I think that this mistake will give the company a headache in the future and make them lose money. I know that Baker Greenleaf might lose the account in which they really wanted their business but they also have had so many problems in the past with the subsidiary account. I rather lose the account than keep having unethical dilemmas with that account.
I also believe that Dan should contact Senator Metcalf and inform him what Oliver was doing, regardless of how many years he has been working there for them. I really do believe that if the Senator knows what is going on with Oliver he would probably fire him or at least start an investigation on the matter. By Dan doing the correct thing he would be keeping his integrity knowing that he did as much as he could to prevent some kind of fraud even if it would lose his job. I also think that if Dan does not report Oliver what he is doing, it would be as if Dan would have been participating in what Oliver is doing.
Part of being an accountant is being honest and making sure to protect the public interest. An accountant is responsible of their actions and by not reporting an unethical behavior it is like participating in what they are doing. While doing this assignment we were evaluating the ethical dilemma in this case. Dan was the accountant that was chosen to audit an important account for Baker Greenleaf. We also looked at many factors, events that led to the dilemma and a possible solution to the dilemma.
Brooks, L. (2007). The Dilemma of an Accountant, Business & professional ethics for directors, executives, & accountants (4th ed.)
Courtney from Study Moose
Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/3TYhaX