Question

Maria is an accountant working on the tax return of a high-tech client. After reviewing the work papers, she discovers that there is a pattern of double billing the United States Navy for various projects done by the tax client. She brings this to the attention of her manager on the job, and he tells her that it is not the CPA firm’s business what the client does since this is not an audit engagement. a. What would you recommend Maria do at this point? b. What potential ethics issues do you see in this situation?

Answer 1

a) We will recommend Maria to report the double billing to the United States Navy for various projects done under the tax return reports. This could result in business going out of CPA firm’s hand. Moreover, Maria must write to the United States Navy regarding this discovery by her about the high-tech client.

b) The potential ethics issues under the situation are:

1. Pointing Fraud: The ethical issue which first comes up is whether the fraud of High-tech client would have to come in lime-light.
2. Revenue lose: The other ethical issue is that whether due to Maria action the High-tect Client should have to lose the revenues.
3. Business loss by CPA firm: The CPA firm could have to lose the business of the High-tech client due to any action on the part of Maria to stop the double billing.