Case 4-6
Gee Wiz
Wanda David, a licensed CPA, works for Gee LLC, a professional accountancy corporation with offices in
Wisconsin and Illinois, in the audit department and she also has some small business clients she services in
her spare time – generally on weekends. Her employer does not know that she does this. Wanda never
thought about a conflict of interests because the firm does no tax work.
One of Wanda’s small business clients, Wiz Inc., was also a customer of Gee and had fallen 90 days past
due on paying bills. In her position with Gee, Wanda was assigned to the audit of Wiz and is responsible for
preparing and estimating Allowance for Doubtful Accounts. During the audit of Wiz’s financial statements
on March 1, 2013, her boss asks her for justification for not including Wiz Inc. in the 90+ day aging report.
It seems there are some audit-related questions about the collectibility of the Wiz account. Wanda came up
with an explanation for not including the Wiz account in the estimated allowance and her boss was
satisfied. Within a week of this request, Wanda is given a nice promotion and raise, but has to transfer to the
office of Gee in Chicago for the new job. Wanda accepts the promotion, leaves immediately, and decides to
quit doing accounting on the side. In moving, Wanda does not complete the corporate tax return for Wiz on
Form 940 that should be filed with the IRS on March 15. She also fails to inform Wiz of her relocation. In
trying to locate Wanda given the impending tax filing deadline, Wiz contacts the managing partner at Gee
and discloses Wanda’s side business.
Questions
1. Do you think it is ethically appropriately for Wanda David to provide tax services to Wiz, an
audit client and customer of her employer, Gee, LLC, at the same time she works for the audit
firm and is part of the audit engagement team on the Wiz audit? Why or why not?
Wanda is violating the trust her employer places in her. She did not inform her employer that she was doing
tax work for Wiz. If she felt it was an ethically appropriate practice, then in all likelihood she would have
felt comfortable informing her employer. Her actions are deceitful, dishonest, and lacking in integrity. She
seems motivated by her own self-interests perhaps to start her own CPA firm some day in the future. Wanda
2. Has David violated any her ethical responsibilities to Wiz? How about her ethical responsibilities
to Gee, LLC? Be specific and reference the AICPA Code of Professional Conduct in answering
the question.
Wanda David, as a tax practitioner, has an obligation to Wiz to maintain her integrity and objectivity (rule
102), exercise due care and competence in tax area (rule 201). David has an ethical obligation to be honest
and transparent in acquiring the tax work from Wiz. An outsider might wonder if David used her position at
3. Assume you are David’s new boss in Chicago and just found out about her dual role as the tax
accountant for Wiz and auditor for the firm on the Wiz audit. What would you do at this point?
David’s new boss in Chicago should be clear in communications with David on the expectations of the job
Optional Question
4. Review the accountancy law and rules of conduct in your state and explain whether David has
violated any ethical standards with respect to the facts of this case.
Many state board rules have requirements of notifying the board and clients of relocations. The board may
also require notification or response to the client if the engagement is not being continued, if the CPA has
