Archives: Solution Manual
978-0077862213 Chapter 4 Solution Manual Part 2
14. What is the danger from an ethical perspective of having a CPA firm that conducts the audit of a public company also engaged in consulting with the company on the installation of a new financial information system? What about […]
978-0077862213 Chapter 4 Solution Manual Part 1
Chapter 4 Discussion Questions 1. It has been said that independence is the cornerstone of the accounting profession. Explain what this means. How do auditors protect against impairments of independence? Independence is considered the cornerstone of the accounting profession as […]
978-0077862213 Chapter 4 Case Lee Han
Case 4-5 Lee & Han, LLC Joe Kang is an audit partner for Lee & Han, LLC. Joe is a CPA in the state of Florida and a member of the AICPA. He recently met with Kate Boller, the CFO […]
978-0077862213 Chapter 4 Case Independence Violations at PwC
Case 4-10 Independence Violations at PricewaterhouseCoopers PricewaterhouseCoopers (PwC) was involved in a series of independence violations in the late 1990s and early 2000s that resulted in strengthening the independence rules for auditors We discuss these situations in two parts. Part […]
978-0077862213 Chapter 4 Case HealthSouth
Case 4-8 HealthSouth Corporation The HealthSouth case is unique because the CEO, Richard Scrushy, was initially acquitted on all accounts while five former HealthSouth employees were sentenced by a federal judge for their admitted roles in a scheme to inflate […]
978-0077862213 Chapter 4 Case Gee Wiz
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 […]
978-0077862213 Chapter 4 Case First Community Church
Case 4-4 First Community Church First Community Church is the largest church in the city of Perpetual Happiness. Yes, it’s in California! A meeting was held on Friday, November 16, to address the fact that money had been stolen from […]
978-0077862213 Chapter 4 Case Family Outreach
Case 4-7 Family Outreach Yimei was a senior state auditor in Michigan and licensed CPA. She has been assigned the audit of Family Outreach (FO), a non-profit social services organization that helps about 32,000 families a year with child- raising […]
978-0077862213 Chapter 4 Case Family Games
Case 4-3 Family Games, Inc. “Yeah, I know all of the details weren’t completed until January 2, 2014, but we agreed on the transaction on December 30, 2013. By my way of reasoning it’s a continuation transaction and the $12 […]
978-0077862213 Chapter 4 Case Beauda Medical Center
Case 4-2 Beauda Medical Center Lance Popperson woke up in a sweat, with an anxiety attack coming on. Popperson popped two anti- anxiety pills, laid down to try and sleep for the third time that night, and thought once again […]
978-0077862213 Chapter 4 Case America Online
Case 4-1 America Online (AOL) Background In May 2000, America Online Inc. (AOL), the world’s biggest Internet services provider at the time, settled charges that it improperly accounted for certain advertising costs. This was the first time the SEC had […]
978-0077862213 Chapter 3 Solution Manual Part 3
16. In October 2010 it was reported that Cheryl Eckard, a quality-assurance manager at the pharmaceutical company Glaxo-SmithKline who had blown the whistle on the safety of products made in its Puerto Rico plant, had been fired as a result […]
978-0077862213 Chapter 3 Solution Manual Part 2
8. According to the IIA Code of Ethics, internal auditors should make a balanced assessment of all the relevant circumstances and should not be unduly influenced by their own interests or by others in forming judgments. Which interests are being […]
978-0077862213 Chapter 3 Solution Manual Part 1
Chapter 3 Discussion Questions 1. In her book ‘Seven Signs of Ethical Collapse,’ Jennings explains: “When an organization collapses ethically, it means that those in the organization have drifted into rationalizations and legalisms, and all for the purpose of getting […]
978-0077862213 Chapter 3 Case parable of Sadhu Part 2
Questions 1. According to the Ethical Dissonance Model, the ethical person-organization fit helps to define the ethical culture of an organization and one’s role in it. The ethics of an individual influences the values one brings to the workplace and […]
978-0077862213 Chapter 3 Case parable of Sadhu Part 1
Case 3-1 The Parable of the Sadhu Bowen H. McCoy (Reproduced with the permission of the Harvard Business Review) Last year, as the first participant in the new six-month sabbatical program that Morgan Stanley has adopted, I enjoyed a rare […]
978-0077862213 Chapter 3 Case United Thermostatic Controls
Case 3-3 United Thermostatic Controls United Thermostatic Controls is a publicly owned company that engages in the manufacturing and marketing of residential and commercial thermostats. The thermostats are used to regulate temperature in furnaces and refrigerators. United sells its product […]
978-0077862213 Chapter 3 Case Steve Jobs Health
Case 3-8 Disclosure of Steve Jobs’ Health as Apple CEO: A Public or Private Matter? An important issue within the scope of corporate governance is whether a company should disclose the health problems of its CEO and how much information […]
978-0077862213 Chapter 3 Case IRS Whistleblower
Case 3-5 IRS Whistleblower and Informing on Tax Cheats On October 4, 2012, the Internal Revenue Service paid a $2 million reward to a whistleblower that exposed an alleged tax avoidance scheme by Illinois Tool Works Inc. (ITW) that cost […]
978-0077862213 Chapter 3 Case Hewlett Packard
Case 3-4 Hewlett-Packard1 Legal Settlement On December 8, 2006, California’s attorney general announced a settlement with Hewlett-Packard (HP) over its corporate spying scandal. The civil settlement involved a lawsuit the state filed against the computer giant in Santa Clara County […]
978-0077862213 Chapter 3 Case HP
Case 3-10 Accountability of Ex-HP CEO in Conflict of Interest Charges How could a CEO and chairperson of the board of directors of a major company resign in disgrace over a personal relationship with a contractor that led to a […]
978-0077862213 Chapter 3 Case Exxon XTO Merger
Case 3-7 Exxon – XTO Merger ExxonMobil Corporation (Exxon) is the world’s largest corporation in terms of revenue and one of the largest in market capitalization. It had sales of $486 billion in 2011giving it the #1 position on Fortune […]
978-0077862213 Chapter 3 Case Bhopal Part 2
India’s Position The Indian government has itself acknowledged that 521,262 persons, well over half the population of Bhopal at the time of the toxic leak, were “exposed” to the lethal gas. 1 In the immediate aftermath of the accident, most […]
978-0077862213 Chapter 3 Case Bhopal Part 1
Case 3-9 Bhopal, India: A Tragedy of Massive Proportions We are citizens of the world. The tragedy of our times is that we do not know this. Woodrow T. Wilson (1856–1924), 28th president of the United States At five past […]
978-0077862213 Chapter 3 Case Bennie and the Jets
Case 3-6 Bennie and the Jets Bennie Gordon is a CPA and a member of the AICPA. Gordon works as an accounting manager at the division level at Jet Energy Company, a publicly-owned company headquartered in South Carolina. Jet Energy […]
978-0077862213 Chapter 3 Case Amgen Whistleblowing
Case 3-2 Amgen Whistleblowing Case Amgen, a Thousand Oaks, California–based company, has been dealing with lawsuits and whistle-blower claims for years over its marketing tactics. The following describes the lawsuits, language from the legal filings against Amgen, and a statement […]
978-0077862213 Chapter 2 Solution Manual Part 2
10. Arthur Andersen LLP was the auditor for Enron, WorldCom, Waste Management and other companies that committed fraud. Andersen was forced to shut its doors forever after a U.S. Department of Justice lawsuit against the firm that it had obstructed […]
978-0077862213 Chapter 2 Solution Manual Part 1
Chapter 2 Discussion Questions 1. Identify the stakeholders and how they were affected by Heene’s actions? The stakeholders in the “Balloon Ball Hoax” are the boy, Falcon Heene; the parents, Richard and Mayumi Heene; brothers, Bradford and Ryo Heene; Larimer […]
978-0077862213 Chapter 2 Case Solution Part 9
Case 2-9 Phar-Mor The Dilemma The story of Phar-Mor shows how quickly a company that built its earnings on fraudulent transactions can dissolve like an Alka-Seltzer. One day Stan Cherelstein, the controller of Phar-Mor, discovered cabinets stuffed with held checks […]
978-0077862213 Chapter 2 Case Solution Part 8
Case 2-8 Juggyfroot “I’m sorry, Lucy. That’s the way it is,” Ricardo Rikey said. “I just don’t know if I can go along with it, Rikey,” Lucy replied. “We have no choice. Juggyfroot is our biggest client, Lucy. They’ve warned […]
978-0077862213 Chapter 2 Case Solution Part 7
Case 2-7 Milton Manufacturing Company Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New York, with branch factories and warehouses in several […]
978-0077862213 Chapter 2 Case Solution Part 6
Case 2-6 Supreme Designs, Inc. Supreme Designs, Inc., is a small manufacturing company located in Detroit, Michigan. There are three stockholders of the company—Gary Hoffman, Ed Webber, and John Sullivan. Hoffman manages the business including the responsibility for the financial […]
978-0077862213 Chapter 2 Case Solution Part 5
Case 2-5 Blues Brothers Assume it is December 31, the last day of the fiscal year, and you are an internal accountant for Saturday Night Accessories, a privately-owned company run by the Blues Brothers, that provides personal services to consumers. […]
978-0077862213 Chapter 2 Case Solution Part 4
Case 2-4 Shifty Industries Shifty Industries is a small business that sells home beauty products in the San Luis Obispo, California area. The company has experienced a cash crunch and is unable to pay its bills on a timely basis. […]
978-0077862213 Chapter 2 Case Solution Part 3
Case 2-3 The Tax Return Brenda Sells sent the tax return she prepared for the president of Purple Industries, Inc., Harry Kohn, to Vincent Dim, the manager of the tax department at her accounting firm. Dim asked Sells to come […]
978-0077862213 Chapter 2 Case Solution Part 2
Case 2-2 Better Boston Beans Better Boston Beans is a coffee shop located in the Faneuil Hall Marketplace near the waterfront and Government Center in Boston. It specializes in exotic blends of coffee, including Sumatra Dark Roast Black, India Mysore […]
978-0077862213 Chapter 2 Case Solution Part 10
Case 2-10 Gateway Hospital Troy just returned from a business trip for health care administrators in Orlando. Kristen, a relatively new employee who reports to him, also attended the conference. Troy works for Gateway Hospital, a for-profit hospital in the […]
978-0077862213 Chapter 2 Case Solution Part 1
Case 2-1 WorldCom The WorldCom fraud was the largest in U.S. history, surpassing even that of Enron. Beginning modestly during mid-year1999 and continuing at an accelerated pace through May 2002, the company, under the direction of Bernie Ebbers, the CEO, […]
978-0077862213 Chapter 1 Solution Manual Part 2
11. Is there a difference between cheating on a math test, lying about your age to purchase a cheaper ticket at a movie theatre, and using someone else’s ID to get a drink at a bar? All are examples of […]
978-0077862213 Chapter 1 Solution Manual Part 1
Chapter 1 Discussion Questions 1. A common ethical dilemma used to distinguish between philosophical reasoning methods is the following. Imagine that you are standing on a footbridge spanning some trolley tracks. You see that a runaway trolley is threatening to […]
978-0077862213 Chapter 1 Case Solution Part 9
Case 1-9 Cleveland Custom Cabinets Note: A correction was made to the case in the text. The cost of direct materials used should be $2,000,000. The cost of goods sold is both cost of goods manufactured and sold. Cleveland Custom […]
978-0077862213 Chapter 1 Case Solution Part 8
Case 1-8 A Faulty Budget Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from the college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked to prepare a sales budget for […]
978-0077862213 Chapter 1 Case Solution Part 7
Case 1-7 Eating Time Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in charge of the firm—Bo Chambers and his brother Moe Chambers—have asked for a “sit-down.” Here’s […]
978-0077862213 Chapter 1 Case Solution Part 6
Case 1-6 Capitalization versus Expensing Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the chief financial officer of the company. Harrison tried to convince Hernandez to go […]
978-0077862213 Chapter 1 Case Solution Part 5
Case 1-5 Reneging on a Promise Part A Billy Tushoes recently received an offer to join the accounting firm of Tick and Check LLP. Billy would prefer to work for Foot and Balance LLP but has not received an offer […]
978-0077862213 Chapter 1 Case Solution Part 4
Case 1-4 Lone Star School District Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the […]
978-0077862213 Chapter 1 Case Solution Part 3
Case 1-3 NYC Subway Death: Bystander Effect or Moral Blindness On December 3, 2012, a terrible incident occurred in the New York City subway when Ki-Suck Han was pushed off a subway platform by Naeem Davis. Han was hit and […]
978-0077862213 Chapter 1 Case Solution Part 2
Case 1-2 Giles and Regas Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm […]
978-0077862213 Chapter 1 Case Solution Part 10
Case 1-10 Telecommunications, Inc. Telecommunications, Inc., is a U.S. company, a global leader in information technology, and it specializes in building data network systems. The company is a major player in the industry, although it is no match for companies […]
978-0077862213 Chapter 1 Case Solution Part 1
Case 1-1 Harvard Cheating Scandal Yes. Cheating occurs at the prestigious Harvard University. In 2012, Harvard forced dozens of students to leave in its largest cheating scandal in memory but the institution would not address assertions that the blame rested […]