Case 5.2 Aig

1. Is it estimable for a certified public accountant or certified public accountant immobile to foster companies answer their reported earnings and financial considerateness? First remove that the certified public accountant or certified public accountant hard is portion as a adviser, 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 care their reported earnings and financial condition. The framework of estimable reason comprises five parts: Opinion, self- reside, consequence, duty, and character. This framework can help us better analyze this matter. First, opinion puts self-interest p benthesis to trip up into this matter. If a CPA or CPA tight archetypical serves as a consultant then as the wedded entitys auditor, it is auditing its own work. In that way, n obody else is really acquittance to check whether a certain accounting intercession is tractable with GAAP. Different opinion resulted from different understanding more or less an issue would not be raised. Moreover, generally speaking, charitable 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 give damage 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 individual partn er of the CPA firm would probably increase h! is 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 brood well-nigh it when realizeing consulting, thus decreasing its audit hours. For example, in the case, by and by receiving the copy of SAS No.50 report, E&Y did not actualize any meaningful separate analysis in ratiocination making that the SPE accounting treatment of PNC was acceptable. Third, consequences focus on the interest...If you exigency to father a full essay, order it on our website: BestEssayCheap.com

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