Reference no: EM132537834

Read carefully the following Case information before planning to write the Report

Point 1: Fantastic Sky Tours Pty Ltd is a small sightseeing tour company in Sydney that specialises in aerial tours of the New South Wales area. Until recently, the company had not had an accounting department. Routine bookkeeping tasks, such as billing, had been handled by a person who had little formal training in accounting. As the business began to grow, however, the owner recognised the need for more formal accounting procedures. Miranda Jenkins, a CPA, was recently hired as the new management accountant, and she has the authority to hire an assistant.

Point 2: During her first week on the job, Miranda was given the performance report on the next page. The report was prepared by Robert Smith, the company's manager of Aircraft Operations, who was planning to present it to the owner, David Lowry, the next morning. 'Look at these favourable variances for fuel and so forth,' Robert pointed out as he showed the report to Miranda. 'My operations people are really doing a great job.' Later that day, Miranda looked at the performance report more carefully. She immediately realised that it was improperly prepared and would be misleading to the company's owner.

Point 3: Miranda Jenkins presented her revised performance report to Robert Smith, along with the explanation why the original performance report was misleading. Robert did not take it well. He complained of Miranda's 'interference' and pointed out that the company had been doing just fine without her. 'I am taking my report to the owner tomorrow,' Robert insisted. 'Yours just makes us look bad.'

Question 1: What are Miranda's ethical obligations as a CPA in this matter? What should she do?