Lone Star School District Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star school district. There have been some problems with audit documentation for the travel and entertainment reimbursement claims of the manager of the school district. The manager knows about the concerns of Jose and Emily, and he approaches them about the matter. The following conversation takes place:
Manager: Listen, i've requested the documentation you asked for, but the hotel says it's no longer in their system.
Jose: Don't you have the credit card receipt or credit card statement?
Manager: I paid cash.
Jose: What about a copy of the hotel bill?
Manager: I threw it out.
Emily: That's a problem. We have to document all your travel and entertainment expenses for the city manager's office.
Manager: Well. I can't produce documents that the hotel can't find. What do you want me to do?
Questions
1. Assume that Jose and Emily are CPAs and members of the AICPA. What ethical standards in the Code of Professional Conduct should guide them in dealing with the manager's inability to support travel and entertainment expenses?
2. Using Josephson's Six Pillars of Character as a guide, evaluate the statements and behavior of the manager.
3. a. Assume that Jose and Emily report to Sharon, the manager of the school district audit. Should they inform Sharon of their concerns? Why or why not?
b. Assume that they don't inform Sharon, but she finds out from another source. What would you do if you were in Sharon's position?