Question

Giving voice to values considers values to be the first pillar of the methodology. In his position as advisory manager of the audit, Steve should be considering his commitment to what?

a. Individual values

b. Organizational values

c. Ethical values

d. Character-based values

[The following information applies to the question.]

Research Triangle Software Innovations is a software solutions company specializing in enterprise resource planning (ERP) business management software. Located in the Research Triangle Park, North Carolina, high-tech area, Research Triangle Software Innovations is a leader in ERP software.

Oak Manufacturing is located in Raleigh, North Carolina. Oak is a publicly owned company that produces oak barrels for flavoring and storage of wine products. As the largest company of its kind in the Southeast, Oak Manufacturing serves all 50 states and other parts of North America.

Tar & Heel, LLP, is a mid-sized professional services firm in Durham, North Carolina. It provides audit, assurance, and advisory services to clients, many of whom are in the Research Triangle area. The firm audits the financial statements of Oak Manufacturing and was just contacted by the client to assist in selecting and implementing an ERP system so the company can improve its collection, storage, management, and interpretation of data from a variety of business activities.

Steve Michaels is Tar & Heel’s advisory manager in charge of the Oak Manufacturing engagement. He is reviewing the criteria used for software selection as follows:

Alignment with client’s needs

Operations integration

Software reliability

Vendor support

Scalability for growth

Pricing

Everything seems in order for the criteria. However, Steve is concerned about the selection of the ERP software of Research Triangle Software Innovations, for one, because Research Triangle is also an audit client of the firm. Given that Research Triangle is the major client in the Durham office, Steve worries about perceptions if the firm selects its client’s software product. Moreover, he knows his firm’s partnership is pushing for sales of its own software and this might be an occasion to do so.

Steve calls Rosanne Field into his office to discuss her selection. This is Rosanne’s first job as the lead advisory staff member on a software selection decision. She has great credentials having graduated with a bachelor’s degree from the University of North Carolina, a masters from North Carolina State, and a computer science doctorate from Duke University. She has five years of experience in advisory services and has received glowing evaluations.

Rosanne explains that there were four ERP software products that made it to the “final four.” From that list she paired down the selection to three packages—Research Triangle Software Innovations, Longhorn Software Systems in Austin, Texas, and Tar & Heel’s own product.

Steve asks Rosanne to explain why Research Triangle Innovations was selected. She goes through the ranking of the criteria. It seems the firm’s total score was slightly below Research Triangle’s but higher than Longhorn Software’s.

Steve asks Rosanne a few pointed questions about the selection process including: (1) Is she aware that Research Triangle is an audit client of the firm? (2) Did she consider management’s desire to push the firm’s own software? (3) Did she consider that the selection of the firm’s software would enable it to fine-tune the product with the experience and feedback from Oak Manufacturing and enhance future sales?

Rosanne listens attentively and asks Steve whether she is expected to alter the rankings and recommend the firm’s product. Steve is surprised by Rosanne’s candor. He tells Rosanne that the firm would never order her to change a recommendation, so long as she paid due attention to all considerations in making the software selection, including that the firm’s own package could do the same things as that of Research Triangle.

Rosanne asks for time to review her work and evaluations of the software products and discuss the matter with Steve in two days. Steve agrees.

Rosanne carefully considers what she is being asked to do. Steve was not very subtle in making his expectations known. Rosanne knows if she is going to make a strong case for staying with the Research Triangle selection, she had better be able to counter Steve’s arguments.

Rosanne decides to speak with Rebecca Chang, her best friend who happens to be on the audit engagement of Research Triangle. Rebecca isn’t sure whether she should share the information she has about the client with Rosanne. However, they are best friends and their siblings are married to each other. In the end she figures it’s a case of “no harm, no foul.”

What Rosanne learns troubles her deeply. It seems Research Triangle had been given a going concern alert in the audit report prepared by Tar & Heel, LLP. Rosanne asks why and is told it was due to questions about the company’s ability to generate sufficient cash flows from earnings to continue its operations. In addition, it has already been turned down by venture capitalists and banks for additional funding.

Rosanne asks Rebecca what she would do if she were faced with the ethical dilemma. Rebecca suggests that Rosanne should speak to Vivian Snow, the advisory services partner, who is Rebecca’s mentor in the firm. Rosanne likes that idea and thanks Rebecca for the advice.

Answer 1

the