Case 8: Balancing Client Interests and Ethical Accounting Practice

Abstract

John Smith, an auditor and partner for Smith & Jones Accounting Firm, was sitting in his office contemplating what course of action he should take regarding the audit of Alpha Corp. Located in California, Alpha Corp. is a publicly held company that distributes textbooks to colleges and universities. In December 2004, Alpha Corp. hired Smith & Jones to audit their financial statements as required by the Security and Exchange Commission. Smith & Jones is a small, regional accounting firm, and Alpha Corp. is one of its largest clients. Alpha Corp. requested that Smith & Jones complete the audit by February 28, 2005 so that the results of the audit could be presented at their annual stockholders’ meeting scheduled for March 15.