The Risk of Following An Unethical Leader
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Level: Basic. Program knowledge level most beneficial to CPAs new to a skill or an attribute. These individuals are often at the staff or entry level in organizations, although content may be of interest to seasoned professional looking to enrich ethical decision-making skills.
CPE Credit: 1 credit in Behavioral Ethics
Exercising professional skepticism is one of the most important responsibilities of an auditor and an accountant. According to AU 230.09, a skeptical auditor is one who "neither assumes that management is dishonest nor assumes unquestioned honesty." This standard is heavily cited in the authoritative auditing literature; however, these can be difficult assumptions to maintain. This case highlights one accountant's struggle with exercising professional skepticism while evaluating a client's financial statements. Additionally, this case discusses how exercising professional skepticism can be important in identifying fraud.
1. Identify the types of employment affiliations that can affect audit quality.
2. Describe the characteristics of a Ponzi scheme.
About the Author:
Kelly Richmond Pope, Ph.D., CPA is an expert in the field of white-collar crime. She is a co-author of The A.B.C.'s of Behavioral Forensics: Using Psychology to Prevent, Detect and Deter Fraud. She is a contributing writer for Forbes.com, The Daily Beast and The Washington Post. She also teaches ethics and forensic accounting at various universities across the country.