Ethical Case: Provisions on Accepting Gifts

Introduction

Most of an auditor's works require abiding by ethical rules and considerations that are set to prevent the creation of impediments that may affect their work. In this regard, they are required to adhere to provisions on accepting gifts. The focus of this paper will be to analyze a case where an auditor receives a gift.

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Is it Acceptable to Purchase the Shirts in the Manner?

It is acceptable to purchase the shirts in such a manner as the process does not impede the independence of the auditor in the auditing process. One of the considerations that make the purchase acceptable is that the acquisition occurred at a discount, which is a common practice and has been historically accepted. As per AICPA (2017) regulations, it is permissible for a client to offer a gift to the auditor. However, the provision only applies if the gift is provided in reasonable circumstances. For the case, BizCaz has a policy that allows auditors and other members of its staff to purchase the shirts at a discount. Hence, the purchase is not exceptional and does not favor the auditors. Instead, it is part of a routine occurrence.

Secondly, ACCA (2017) stipulates that small gift of gratitude is acceptable if the work conducted by the auditor for the client has ended. ACCA (2017) further specifies that the gifts should not be money and it should be modest. Primarily, it should be a gift that does not bring the independence of the auditor to question. The scenario in the case fits and abides as per the stipulations as the shirts were purchased after the auditing process had ended. Hence, the auditor's judgment may not be influenced to misreport the findings. Also, the gift received was not money but was instead a discount. It was also insignificant thus, it cannot affect the independence of the auditor.

Effects of the Information Presented to the Adequacy of the Audit

The occurrence in the provision of the gift does not have any impact on the adequacy of the audit. The reason for the assertion is that the gift did not impede the independence of the auditor as discussed earlier since it was not in monetary terms, it was modest and was provided after the auditing process had ended. Therefore, the adequacy of the audit was not affected. However, if the auditing team was supplied with the gifts in the past, then the team would be considered as accountants who were not independent. They may be viewed as non-independent since the discount though not significant would have some connotation to the independence of the auditors in future.

However, an audit that is to be conducted in future would be tested for adequacy considering that the controller who provided the staff members and the auditor with the shirts withdrew them from a pile in the warehouse without documenting them. The occurrence would put to question inventory control measures instituted by the company since the deed done by the controller puts into question whether inventory control mechanisms in the organizations to exist. If they do not exist, it would mean that shirts may be given out without documentation. The auditor thus has three options regarding the matter. He might ignore the issue by assuming that it does not occur frequently. Secondly, he might choose to talk about it to the controller diplomatically and professionally. Lastly, he might inform the in-charge senior about the matter.

Application of Saint Leo Core Value of Integrity to the Auditing Procedure

According to Govoni, Wright, and Wubbenhorst (2005), Saint Leo requires one to evaluate scenarios then use the values. Govoni, Wright, and Wubbenhorst (2005) further state that Saint Leo's commitment to excellence requires that the faculty, students, and staff must pledge to be honest, fair and exhibit consistency in their words and deeds to exercise integrity.

When these values are applied to the auditing procedure, an auditor is required to honest. He or she should ensure that no data is intentionally misreported, omitted or used merely to cover up malpractice. The auditor should be honest enough to report the data as it is without alternations. An auditor is also required to be fair which means that the statement produced by the auditor will be free of material misstatements thus fully representing the financial position of the organization. The auditor is also required to present the financial statements faithfully excluding any elements of bias thus reflecting the economic substance of the transactions. Lastly, auditors should be consistent when applying the principles of accounting in every auditing procedure that is undertaken.

Conclusion

In the case, purchasing the shirts in the manner that the process was conducted is acceptable since it is a common practice that is accepted, the gift was given after completion of the auditing process, and it was insignificant. Also, the gift does not have any effect on the adequacy of the audit. Lastly, Saint Leo Core Value of Integrity requires auditors to be honest fair and just.

References

ACCA. (2017). To accept... or not to accept? We examine the fine line between receiving a gift and a bribe in business. Retrieved from http://www.accaglobal.com/ie/en/student/sa/features/gifts.html

AICPA. (2017). AICPA Plain English Guide to Independence. 1-53. Retrieved from https://www.aicpa.org/interestareas/professionalethics/resources/tools/downloadabledocuments/plain English guide.pdf

Govoni, J., Wright, V., & Wubbenhorst, P. (2005). Fusions: Integrating Values in Higher Education. Journal of College and Character, 6(5).