Questions from Accounting Ethics


Q: In the first three months of 2021, Johnson Pharmaceutical’s sales and

In the first three months of 2021, Johnson Pharmaceutical’s sales and earnings were declining, placing the company in financial distress. As a result, Johnson had begun the process of borrowing $1 mil...

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Q: Lance Popperson woke up in a sweat, with an anxiety attack Lance Popperson woke up in a sweat, with an anxiety attack

Lance Popperson woke up in a sweat, with an anxiety attack coming on. Popperson popped two anti-anxiety pills, laid down to try and sleep for the third time that night, and thought once again about hi...

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Q: Family Games, Inc., is a privately owned company with annual

Family Games, Inc., is a privately owned company with annual sales from a variety of wholesome electronic games that are designed for use by the entire family. The company sees itself as family-orient...

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Q: Katy Carmichael, CPA, was just promoted to audit manager in

Katy Carmichael, CPA, was just promoted to audit manager in the technology sector at a large public accounting firm. She started at the firm six years ago and has worked on a number of the same client...

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Q: Do you agree with Thomas McKee's conception of earnings management as applied

Do you agree with Thomas McKee's conception of earnings management as applied to (a) operational earnings management and (b) accounting earnings management?

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Q: Joe Kang is an owner and audit partner of Han, Kang

Joe Kang is an owner and audit partner of Han, Kang & Lee, LLC. As the audit of Frost Systems was reaching its concluding stages on January 15, 2022, Kang met with Kate Boller, the CFO, who is also a...

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Q: When Karen Ward started at Ernst & Young in 2013, only

When Karen Ward started at Ernst & Young in 2013, only four senior managers in her division were women. All the partners were men. This was a red flag, but she didn’t see it then but soon realized tha...

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Q: On September 10, 2019, the Public Company Accounting Oversight Board

On September 10, 2019, the Public Company Accounting Oversight Board (PCAOB) censured Marcum LLP and Alfonse Gregory on the basis of its findings that Marcum repeatedly violated PCAOB rules and standa...

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Q: PwC violated SEC rule 2-02(b) of Regulation

PwC violated SEC rule 2-02(b) of Regulation S-X and PCAOB Rule 3525 by engaging in improper professional conduct in violation of the independence rules on audit clients. This case is unique because th...

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Q: Assume Ethan Lester and Vick Jensen are CPAs. Ethan was seen

Assume Ethan Lester and Vick Jensen are CPAs. Ethan was seen as a “model employee” who deserved a promotion to director of accounting, according to Kelly Fostermann, the CEO of Fostermann Corporation,...

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