Accounting Ethics Case Analysis

Name

Course Section

Case Name : The Viccio Martin Audit Controversy Case

Date : May 12 , 2009

FACTS

Viccio Martin , an accounting firm tangled up in an audit discrepancy problem with its largest client , Models . Inc . Jane Ashley a newly hired staff accountant of Viccio Martin , on her first assignment of auditing the client company 's Accounts Payable Cut-Off , discovered an audit-related issue involving her senior accountant , Frankie Small During the year-end date inventory count , Frankie Small together with a coop-student did not exercise correct auditing procedures . The two audit

staffs were only present to observe inventory count in one of the company 's three warehouses , and instead based audits on the other two remaining warehouses in an statistical samples provided by the company without even reviewing the accuracy of the company 's inventory management system . Further , Jane , on her review of the company 's financial reports found out that the company 's inventory documents were messy and disorganized , and the inventory section of the reports were hard to interpret . While conducting audit on the client company 's accounts payable records , she had found out that many of its invoices were unrecorded on its accounts payable master ledger . After auditing both recorded and unrecorded invoices , she reported an estimated 400 ,000 cut-off problem . When she brought this problem to Frankie and Mr . Viccio , the firm engaged in many discussions with Mrs , Hyst , the head manager and 50 shareholder of Models , Inc . While the re-audit is going on , the auditors reported a loss...