ACCT 630 Period 3 Week 5 & 6 Response

There are two cases. I will post the initial case and following that will be the posts that require a response. There should be 2 posts with no more than 200 words and minimum of 2 academic references.

The Case:

Stan Misuse, a “model employee,” is up for a promotion to CFO at Much Corporation. What the CEO, John Much, doesn’t know is that Stan has been embezzling $50,000 from the company. With auditors on the way, Stan seeks help from his friend and accounting manager, Ryan Helper, to cover up the fraud. Stan knows Ryan has committed his own fraud in the past and uses this knowledge to pressure Ryan into helping him. Ryan is uncomfortable with the request, having previously paid back the $20,000 he stole and wanting to avoid further wrongdoing.

The Dialogue Question:

Proverbs 17:17 says, “A friend loves at all times, and a brother is born for a time of adversity.” This verse highlights the importance of loyalty and support. However, in professional life, loyalty to a friend can conflict with ethical duties.

In the case of Stan and Ryan, discuss how Stan is attempting to use loyalty to a friend to justify an unethical act. Explain the moral and professional dilemma Ryan faces. What are the potential consequences for Ryan if he helps Stan, and what are the ethical obligations of a professional in this situation? Use an ethical framework to explain what Ryan should do, and how his decision, whether to help or not, reflects his personal integrity.

Dialogue Post Week 6

The Case:

Josh, a CPA, is facing a lawsuit from a client, Small, Inc., and its bank, Big Bank, after a fraud was discovered that he failed to detect during an audit. An employee was stealing inventory, and the company had falsified accounts receivable confirmations. The company is now facing bankruptcy and has defaulted on its loan to the bank. The bank is suing Josh for negligence, claiming he did not exercise due care in the audit.

The Dialogue Question:

Luke 16:10 states, “Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much.” This spiritual principle emphasizes the importance of faithfulness and responsibility in all matters, no matter how small.

In the case of Josh, analyze the auditor’s responsibilities regarding inventory and accounts receivable in accordance with Generally Accepted Auditing Standards (GAAS). Explain how a lack of due care in these areas could be a failure of professional responsibility. Evaluate whether Josh is liable to either Small, Inc. or Big Bank, and discuss the defenses he may have against these claims. How does the principle of faithfulness in small things, as outlined in scripture, apply to an auditor’s duty of due care and professional skepticism?

Note: For each discussion period, you are required to create 2 replies. (200 words or fewer each). Each post must include a minimum of two academic references

Noah’s Week 5 Post

Stan misuses friendship and loyalty in Proverbs 17:17 (A friend loveth at all times, and a brother is born for adversity) by pressuring Ryan to cover up $50,000 in embezzlement. He appeals to their friendship and Ryans past fraud, reframing a crime as an act of support.

Ryan faces a serious dilemma: loyalty to a friend versus his professional duty to protect assets, report fraud, and uphold integrity and due care. The AICPA Code requires integrity and prohibits subordination of judgment (Mintz & Miller, 2025, pp. 1415, 211). If Ryan helps, both risk criminal prosecution, license loss, termination, lawsuits, and reputational damage to the company, shareholders, and public trust.

Using virtue ethics, Ryan should refuse. Virtue ethics stresses honesty, courage, and integrity over situational loyalty choosing principle rather than expediency (Mintz & Miller, 2025, p. 14). This framework directly applies because Stan is asking Ryan to compromise his moral character for friendship. Cafferky adds that loyalty must never override righteousness or enable wrongdoing (Cafferky, 2015, Ch. 11). Proverbs 17:17 celebrates loyal friendship, but it does not justify covering sin.

Ryan should document the conversation, refuse to participate, and report the embezzlement to the CEO or audit committee.

References

Cafferky, M. E. (2015). Business ethics in biblical perspective: A comprehensive introduction. IVP Academic.

King James Bible Online. (n.d.). King James Version (KJV Standard). Retrieved February 2, 2026, from

Mintz, S. M., & Miller, W. F. (2025). Ethical obligations and decision-making in accounting (Looseleaf ed.). McGraw-Hill.

Noah’s Week 6 Post

Josh failed to detect material inventory theft and falsified accounts receivable confirmations during the audit of Small, Inc., resulting in bankruptcy, loan default, and negligence lawsuits from both the company and Big Bank.

Under GAAS, auditors must obtain sufficient appropriate evidence for inventory (existence, completeness, valuation) through observation, counts, confirmations, and substantive testing, and for accounts receivable (existence, accuracy) through confirmations and alternative procedures (Mintz & Miller, 2025, Ch. 5, pp. 260261). Failure to exercise due care and professional skepticism in these routine procedures breaches professional responsibility.

Josh is likely liable to Small, Inc. for breach of contract and negligence. He may also be liable to Big Bank under third-party reliance rules if foreseeable reliance is shown. Defenses include contributory negligence or GAAS compliance, but weak evidence collection weakens them.

Luke 16:10 teaches that faithfulness in small things proves trustworthiness in larger ones. This directly applies to auditing: careful due care and skepticism in routine procedures (the little things) demonstrate the integrity expected of a professional. Joshs failure shows a lack of biblical stewardship in everyday audit work (Cafferky, 2015, Ch. 11).

Josh should have documented procedures thoroughly, maintained skepticism, and performed adequate testing to fulfill both GAAS and biblical faithfulness

References

Cafferky, M. E. (2015). Business ethics in biblical perspective: A comprehensive introduction. IVP Academic.

King James Bible Online. (n.d.). King James Version (KJV Standard). Retrieved February 2, 2026, from

Mintz, S. M., & Miller, W. F. (2025). Ethical obligations and decision-making in accounting (Looseleaf ed.). McGraw-Hill.