Leight Ann Walker Staff Accountant
Leigh Ann Walker graduated from a major state university with a bachelor's degree in ac counting During her college career, Walker earned a 3.9 grade point average and partici. pated in several extracurricular activities, including three student business organizations. Her closest friends often teased her about the busy schedule she maintained and the fact that she was, at times, a little too "intense." During her final year of college, Walker inter- viewed with several public accounting firms and large corporations and received six job offers. After considering those offers, she decided to accept an entry-level position on the auditing staff of a major international accounting firm. Walker was not sure whether she wanted to pursue a partnership position with her new employer. But she believed that the training programs the firm provided and the breadth of experience she would receive from a wide array of client assignments would get her career off to a fast start.
Walker's "start date" was June 4th, exactly one month following her graduation date She spent the first two weeks on her new job at her firm's regional audit staff training school. On returning to her local office in mid-June, she was assigned to work on the audit of Saint Andrew's Hospital, a large sectarian hospital with a June 30 fiscal year-end. Walker's immediate superior on the Saint Andrew's engagement was Jackie Vaughn, a third-year senior. On her first day on the Saint Andrew's audit, Walker learned that she would audit the hospital's cash accounts and assist with accounts receivable. Walker was excited about her first client assignment and pleased that she would be working for Vaughn. Vaughn had a reputation as a demanding supervisor who typically brought her engagements in under budget. She was also known for having an excellent rapport with her clients, a thorough knowledge of technical stan- dards, and for being fair and straightforward with her subordinates.
Like many newly hired staff auditors, Walker was apprehensive about her new job. She understood the purpose of independent audits and was familiar with the work per formed by auditors but doubted that one auditing course and a two-week staff-training seminar had adequately prepared her for her new work role. After being assigned to work under Vaughn's supervision, Walker was relieved. She sensed that although Vaughn was demanding, the senior would be patient and understanding with a new staff audi- tor. More important, she believed that she could learn a great deal from working closely with Vaughn. Walker resolved that she would work hard to impress Vaughn and had hopes that the senior would mentor her through the first few years of her career.
Early in Walker's second week on the Saint Andrew's engagement, Jackie Vaughn casually asked her over lunch one day whether she had taken the CPA examination in May. After a brief pause, Walker replied that she had not but planned to study intensively for the exam during the next five months and then take it in November. Vaughn indicated that was a good strategy and offered to lend Walker a set of CPA review manuals-an offer Walker declined. In fact, Walker had returned to her home state during the first week of May and sat for the CPA exam, but she was convinced that she had failed it. Fear of failure or, rather, fear of admitting failure, caused Walker to decide not to tell her co-workers that she had taken the exam. She realized that most of her peers would not pass all sections of the exam on their first attempt. Nev- ertheless, Leigh Ann wanted to avoid the embarrassment of admitting throughout the remainder of her career that she had not been a "first timer.
Walker continued to work on the Saint Andrew's engagement throughout the sum- mer. She completed the cash audit within budget, thoroughly documenting the re- sults of the audit procedures she applied. Vaughn was pleased with Walker's work and frequently complimented and encouraged her. As the engagement was winding down in early August, Walker received her
grades on the CPA exam in the mail one Friday evening. To her surprise, she had passed all parts of the exam. She immedi- ately called Vaughn to let her know of the impressive accomplishment.
To Walker's surprise, Vaughn seemed irritated, if not disturbed, by the good news. Walker then recalled having earlier told Vaughn that she had not taken the exam in May. Walker immediately apologized and explained why she had chosen not to disclose that she had taken the exam.
Following her explanation, Vaughn still seemed annoyed, so Walker decided to drop the subject and pursue it later in person.
The following week, Vaughn spent Monday through Wednesday with another cli- ent, while Walker and the other staff assigned to the Saint Andrew's engagement continued to wrap up the hospital audit. On Wednesday morning. Walker received a call from Don Roberts, the office managing partner and Saint Andrew's audit en- gagement partner. Roberts asked Walker to meet with him late that afternoon in his office. She assumed that Roberts simply wanted to congratulate her on passing the CPA exam.
The usually upbeat Roberts was somber when Walker stepped into his office that afternoon.
After she was seated, Roberts informed her that he had spoken with Jackie Vaughn several times during the past few days and that he had consulted with the three other audit partners in the office regarding a situation involving Walker. Roberts told Walker that Vaughn was very upset by the fact that she (Walker) had lied regarding the CPA exam. Vaughn had indicated that she would not be comfortable having a subordinate on future engagements whom she could not trust to be truthful. Vaughn had also suggested that Walker be dismissed from the firm because of the lack of integrity she had demonstrated.
After a brief silence, Roberts told a stunned Walker that he and the other audit partners agreed with Vaughn. He informed Walker that she would be given 60 days to find another job. Roberts also told Walker that he and the other partners would not disclose that she had been "counseled out" of the firm if they were contacted by employers interested in hiring her.
Questions
1. In your opinion, did Vaughn overreact to Walker's admission that she had been untruthful regarding the CPA exam? If so, how would you have dealt with the situation if you had been in Vaughn's position? How would you have dealt with the situation if you had been in Roberts' position?
2. Vaughn obviously questioned Walker's personal integrity. Is it possible that one can fulfill the responsibilities of a professional role while lacking personal integrity? Why or why not?
Suzette Washington, Accounting Major
Suzette Washington financed her college education by working as an inventory clerk for Bertolini's, a clothing store chain located in the southeastern United States Bertolini's caters primarily to fashion-conscious young men and women. The company's stores carry a wide range of clothing, including casual wear, business suits, and accessories The Bertolini's store for which Suzette worked is located a few blocks from the campus of the large state university that she attended. Except for management personnel, most of Bertolini's employees are college students.
Suzette's best friend and roommate, Paula Kaye, worked for Bertolini's as a sales clerk. Paula majored in marketing, while Suzette was an accounting major
During Suzette's senior year in college, Bertolini's began experiencing abnor mally high inventory shrinkage in the store's three departments that stocked men's apparel. Suzette's supervisor, an assistant store manager, confided in her that he believed one or more of the sales clerks were stealing merchandise. Over lunch one day in the student union, Suzette casually mentioned the inventory problem to Paula Paula quickly changed the subject by asking Suzette about her plans for the weekend
"Paula, rewind for just a second. Do you know something that don't?"
"Huh? What do you mean?"
"Missing inventory shrinkage theft?"
After a few awkward moments, Paula stopped eating and looked squarely into her friend's eyes.
"Suzette, I don't know if it's true, but I've heard a rumor that Alex and Matt are stealing a few things each week. Polo shirts, silk ties, jeans. Occasionally.
they take something expensive, like a hand-knit sweater or sports jacket.
"How are they doing it?"
"Tve heard and don't repeat any of this now-I've heard that a couple of times per week, Alex stashes one or two items at the bottom of the trash container beneath the number two cash register. Then Matt, you know he empties the trash every night in the dumpster out in the alley, takes the items out and puts them in his car"
"Paula, we can't let them get away with this. We have to tell someone"
"No 'we' don't. Remember, this is just a rumor. I don't know that it's true. If you tell a manager, there will be questions And more questions. Maybe the police will be brought in. You know that eventually someone's going to find out who told. And then slashed tires. phone calls in the middle of the night."
"So, don't get involved? Don't do anything? Just let those guys keep stealing?"
"Suze, you work in inventory. You know the markup they put on those clothes. They expect to lose a few things here and there to employees.”
“Maybe the markup wouldn't be so high if theft wasn't such a problem" Now, there was no doubt in Paula's mind that Suzette was going to report the al- leged theft scheme to management. Two months, Suze. Two months till we graduate. Can you wait till then to spill the beans? Then we can move out of state before our cars are spray-painted"
One week following Sonette and Paula's conversation, a Bertolini's store manager received an anonymous typed message that revealed the two-person theft ring r mored to be operating within the store. Bertolini's immediately retained a private detective Over a four week period, the a docut $500 of merchandise thefts by Alex and Matt. After Bertolin's notified the police, the local district attor ney filed criminal charges against the young A plea bargain agreement ar ranged by their attorneys resulted in suspended prison sentences for Alex and Matt. The terms of that agreement included making restitution to Bertolin's, completing several hundred hours of community service, and a lengthy period of probation
Questions
1. What would you do if you found yourself in a situation similar to that faced by Suzette in this case?
2. Do you believe that it was appropriate for Suzette to report the alleged theft ring to a store manager? Would it have been unethical for Sunette nor to report the rumored theft ring?
3. Accounting majors are preparing to enter a profession recognized as having one of the strongest and most rigorously enforced ethical codes. Given this fact, do you believe that accounting majors have a greater responsibility than other business majors to behave ethically?
4. Briefly discuss internal control activities that might have prevented the theft losses suffered by Bertolini's
