preview

Cardillo Case

Better Essays

Darrell Gudenau
Auditing
Linda Campbell
Cardillo Travel Services Case 1. The first person that faced an ethical dilemma was the former controller of Cardillo Russell Smith. Although he is not an accountant, he still had to make an ethical decision on whether to sign off on the transaction. He was called into the chairman’s office to be persuaded to sign the affidavit but he didn’t budge. Smith knew that recognizing the payment as revenue would be improper. The first accountant that faced an ethical dilemma was Helen Shepherd who was the audit partner overseeing Touche Ross. They found the same dilemma in the entry that Smith would not sign off on. Shepherd first discussed the entry with her subordinates before she questioned …show more content…

She then received information from United Airlines that stated that the disputed amount was refundable through 1990 if certain stipulations of the contractual agreement between the two parties were not fulfilled. The third generally accepted standard of audit fieldwork should be considered as it requires that auditors obtain sufficient competent audit evidence to afford a reasonable basis for an opinion regarding the financial statements under examination. I believe there evidence was sufficient enough bring up a reasonable basis for their opinion on the transaction. The requested information from United Airlines proved that the transaction couldn’t be recorded as revenue but Rognlien insisted that it was a secret agreement with the chairman of United Airlines. However, when Shepherd requested to talk to the chairman she was denied as Rognlien wouldn’t give her the go ahead. 4. The SEC wants to understand the reasons behind the auditor change and what they might say about a company’s health and operations. They want to see if the client initiated auditor change was because of things like disagreements over internal control weaknesses or reliability of financial reporting. The registrant must specifically comment on whether the company had any significant disagreements with its auditors over accounting principles, auditing procedures, or other financial reporting matters. The dismissed audit firm must communicate with the SEC, stating whether it agrees with

Get Access