Reference no: EM133128226

Question - Cody Chadwick, C.P.A., began working as a staff accountant at Dreamworld, one of the top accounting firms. While preparing for the C.P.A. exam, he studied the AICPA code of ethics. Cody believed that independence was an integral part of being a good auditor and required for the audit profession. After working here for 18 months, Cody believes that the firm is on the right track and deserved its reputation for excellence in the field. Cody was raised with a Protestant work ethic and believes in responsibility and hard work. He believes in loyalty to an employer and the hierarchy of authority. His next assignment was challenging. Stan Fields, the senior audit partner on the audit, assigned Cody to audit the subsidiary. Stan told Cody that his job was to solve all the problems that arise and present a clean opinion for the subsidiary. Cody was given a few staff people to help him, so it was his first supervisory role as well. The two staff people did not like working for Stan as they felt Stan was hard to get along with, and it was either his way or the highway. A few problems arose during the audit, and Stan did not budge in his opinions. Now with the audit due in 5 days, Cody has some serious issues.

Cody believes that one piece of property is only worth $250,000, but the client has it booked at $2 million on its books. After speaking with the client, they refused to write it down, believing it will be rented shortly. The write-down of this property would be considered material for the subsidiary but not for the client. So Cody submitted his report on the subsidiary with a subject-to-opinion and with the exception of the write-off of $1,750,000. Stan reviewed Cody's report and told him to remove the subject-to opinion, present a clean opinion, remove the discourse, and all references to the $250,000 value on the property. Cody did not agree, and things became heated. Stan informed Cody that he was a senior auditor and doing this job for eight years. Stan also said he was responsible for a clean opinion for this client and that the subsidiary was not material and only will be looked at inside the company. Stan reminded Cody that he was to be evaluated for the first time based on being a supervisor. Cody found out later that Stan removed all references to the $250,000 value and issued a clean opinion on the audit. Also, Stan issued a negative evaluation of Cody's performance on the audit.

Required -

1. Evaluate this case based on the six pillars of character for each party.

2. Evaluate this case based on the various ethical philosophies for each party.

3. Evaluate the case based on the integrated ethical decision-making framework's four steps.

4. What should Cody Chadwick do in this situation?

5. How are you prepared to handle a similar situation, and what would you do and why?

6. Are there any AICPA professional code of conduct and ethics violations in this case?