Essay: PR And Tactics For Accountants - A Professional Approach.

Describe about the Public Relations and Tactics for Professional Accountants.

Cawthray et al. (2013) identified that professional accountants will encounter certain threats while they are rendering their services. It is a concern because these threats could cause the accountants to fault the fundamental principles that define the code of ethics. Normally, it is not a must for an accountant to follow the Code of Ethics for Professional Accountants, blindly, rigidly or just because it exists. On the contrary, the professional accountants bear the responsibility of the identification, evaluation, and elimination of threats to compliance. Should the identified threats be significant, the accountant will apply the safeguards which seek to eliminate these threats or even to reduce them to manageable levels (Gauthier et al. 2010). The essentiality of the existence of the Code is to solicit the feeling of responsibility in a bid to act in the best suitable way. Having the Code as a guideline ensures that there is professionalism and for an organization that is marked as such has a higher probability of attracting more clients.

A threat that revealed itself in the above conversation is a self-interest threat. Joyce & Rankin (2010) identify it a type of threat that will occur following the personal interests of an accountant. The causes of the threat are plenty but one sure way that it comes about is an internal conflict of the accountant. An accountant may face debt which may force the accountant to feed his or her self-interest using resources of the company. When that occurs, the accountant will have to lie about it which may ultimately cost the organization. The unsanctioned expenses that the accountant will cause the company will ultimately become significant (Miller 2010). Self-interest threats are dangerous because they result in reduced accountability of the organization’s processes ultimately costing it its profits. The principle that is affected be these threats is the principle of integrity.

Self-interest threats in this case study arise because the CFO is showing signs that he might have used some of the organization’s resources to fulfill personal endeavors. In this case, the CFO will try to prevent the audit team from finding evidence of the foul play. The evidence in this case study reveals itself when the CFO asks for a refocusing of the analysis in a bid to blind the management of the organization.

Self-review threats are those that occur whenever a certain judgment forces a re-evaluation of the professional accountant responsible for it (Magathy & Pyman 2010). The threat can be identified when the accountant seems biased in his or her review of a case. Professional accountants are expected to be impartial in their judgments and decisions because they deal with a very sensitive area. If they make biased judgments, it can be deduced that there should be a reason behind the biases. Sometimes, the biased decisions are intended to protect the status of the accountant which also raises concern (O’Donohue 2016). What is the accountant trying to protect him or herself from? Therefore, it makes an investigation paramount.

Scenario 1

In this case study, self-interest threats can be seen when the Chief Financial Officer of the organization intervenes in a case that has been sanctioned by top management. The reaction of the CFO was suspicious because it comes right after going through the draft analysis. Perhaps, the analysis revealed certain inadequacies that might reveal foul play. As a professional, it is easy to notice that the CFO is requesting that some information should be withheld from the final report which begs the question why. The CFO does not want the cash flow to be studied but instead encourages the acquisition part.

The American Accounting Association model suggests that the first step of the process should be the establishment of the facts of the case. It is a mistake to make decisions basing on less information. Facts establishment entails the investigation of the issue so that the claims can be substantiated (Ho & Lin 2008). Making informed decisions is the advantage of taking sufficient time to investigate the case. Eliminating ambiguity is the aim of this stage. Here, all the irrelevant information is also removed leaving the decision maker with relevant information. In the case of Luke and Zane, there is a claim that Zane was indeed competent as well as a claim that the client had deceived the audit manager. It would not make sense if Luke rushed the case to his superiors without solid evidence which requires that Luke should conduct a proper investigation.

The second stage of the AAA model is the identification of the ethical issues. The primary purpose of this model is to allow for accountants to embrace ethical decision making. Professional accountants face ethical dilemmas in their workplaces every now and then. These ethical dilemmas could force the accountants to break the code of ethics or worse, break the law. Idialu & Oghuma (2007) assert that these ethical issues are the reason for the existence of this model. Therefore, before an accountant makes any decision, he or she needs to find out which ethical issues are at stake. In the case of Luke and Zane, the ethical issue present is the fact that if Luke agrees to do the job at hand and gain all the credit, it will mean that he is dishonest. Moreover, he is willing to throw away their relationship because of financial gain.

Identifying the norms that govern the way people perceive that particular case is important. That is because it will allow for one to see a possible option to undertake. The stage entails the placement of the issue in its social context. That will provide the societal perspective regarding the matter (Lin & Ho 2008). The essence of putting it into context is that it will ensure that the decision that an accountant makes is in line with the requirements of the society and the profession. Regarding Luke and Zane, it is wrong in many societies for one to partake in backdoor endeavors. When Luke decides to go along with the lie that the client perpetrated, it makes him a part of the lie since he wishes to gain from it. Professionally, it is wrong because by accepting the deal created by the client, Luke will be destroying Zane’s profession and career.

Self-interest threats

The next stage involves the identification of the possible courses of action that can be taken by the accountant. Having multiple and possible ways to deal with a problem is advantageous because of the numerous options provided. When one option fails, the accountant can resort to using another option. This stage requires that the accountant should make an analysis of the work environment in a bid to seek all the possible opportunities available (Lubbe 2015). These methods are then arranged in a hierarchical manner in order of their priority. The accountant will arrange the options in an order that starts with the best option to the worst option. Luke’s first option is to go to a superior officer and reveal the issue to him or her. That will give Zane a chance to prove himself to the organization and ultimately, it will improve their relationship at work. The other option is for Luke to decide to go along with the client’s plan of throwing Zane off the job.

From the available options, the next stage entails choosing the best option out of the available ones. When making this choice, there is a need for the accountant to remember the norms that apply to that case. The accountant needs to ensure that they are consistent with the norms. If not, there is a possibility that it would result in grave outcomes. The criteria that the accountant will use here is if the option is in line with the norms or not (Sin et al. 2011). The options available will be judged based on this criteria so that the options that are in line gain a priority point over the others. For the case of Luke and Zane, the option that conforms to the norms (represented by the code of ethics) is the option of going to the authority and laying out the accusations and evidence.

The next stage involves the accountant considering the consequences that could arise from the available options. That will be another basis upon which the accountant will judge the available options. The AAA model endeavors to render the implications of each option known so that when the final decision is reached, it is made in recognition and full knowledge of these consequences (Solbrekke & Englund 2011). Luke will have to make the final decision knowing that each has final consequences. Choosing to go with the client’s lies means that he would have a bitter relationship with Zane. It could also cause Zane to lose his job despite his good qualifications. Going to a higher authority will warrant serious investigations which will reveal the truth. Considering that the latter option is more advantageous than the former means that it is the best decision. That leads directly to the final stage of decision making where the accountant can decide on a final decision based on all the information gathered in the process. Ultimately, Luke being a professional using the AAA model, will decide to let the managers of the firm aware of the misdeeds of the client.

Self-review threats

Using Mary Guy’s ethical decision-making model, Luke will arrive at the same decision. Yi-Hui (2009) reveals that the model encourages loyalty which in this case, Luke is experiencing a conflict of his loyalties. He could choose to be loyal to himself where he could decide to take up the client’s offer. That means that he chooses to betray his loyalty to his friend and his employer. He would betray his friend because he would replace him and ultimately make him redundant. His employer would also be betrayed because Luke would have caused the organization to lose a qualified employee. It will have to incur costs of trying to replace him or even hiring an expatriate.

Brown (2013) defines accounts payables can be defined as the short-term obligations that an organization enters because of purchase of goods and services in the course of business. When an organization buys goods from its suppliers, it is supposed to pay for these products. Until it pays the money, the supplier will consider that money as accounts receivable because it is yet to be paid. When conducting an audit of the accounts receivables system, auditors need to consider that the purchases cycle is inclusive of the authorization purchases as well as the initiation purchases. A sound accounts receivables system is a key factor in the company’s success in the business world (Brown 2013). That is because it affects the trust and loyalty of the customers to the company.

The tasting the accounts receivable system reveals evidence about the current liabilities of the company. Many organizations ignore the potential effect of the accounts receivable on the profits and functionality of the organization. One of the assertions that presents itself in the case study is the completeness of the system. Regarding this assertion, the auditor checks if all the balances within the system contain all the transactions of the period. Here, the auditor intends to reconcile the entire ledger of the accounts receivables (Camfield & Roelen 2013). The essence of this is that it will reveal if there is any issue with the account receivables ledger accounts. That is, if the ledger accounts totals do not add up to the same value as the original amount that the company is supposed to pay. In the case of any discrepancy, this is the first step that the auditor needs to consider.

The completeness assertion is at risk in the case study because of the existence of the discrepancy between the requested amounts and the amounts presented in the invoices. The discrepancy can be inferred to produce two outcomes. First, it is possible that the ledger accounts have missed certain transactions which would result in an imbalance of the ledger accounts. The company can deal with this by ensuring that the accountants revisit the ledgers in a bid to calculate the totals again. The second potential outcome could be that the accountants responsible are deliberately missing out on some of the payments (Espinosa 2006). That can be substantiated with the fact that most of the unpaid invoices are as a result of incorrect pricing. That begs the question why many of these invoices are not correctly priced. The fact that the account receivable system is inaccurate begs for further investigations.

Scenario 2

Unusual relations of the accounts receivable system should be thoroughly investigated if the company is to discover where the fault is with the system. Greenfield et al. (2010) posit that failure to detect these faults could have an undesired effect on the company’s profits because it will impact the loyalty of the clients. When the organization is unable to meet the cost of the items it purchases in good time, there is a chance that its suppliers will lose their trust in the organization. That increases the rate of substitution for the organization which is very threatening. The suppliers will opt to seek better partners which will cause the organization to face increased challenges in its industry. For instance, when the organization fails to identify the source of the problem, it will cause the suppliers to look for other clients that can buy their products. That will cause the organization to look for suppliers from other areas which increase the operation costs of the organization.

Under the test of completeness, cash disbursement cutoff tests could be useful. It is a test that involves testing if the accounts receivable reduction and the cash disbursement can be reconciled to bring about the same figure (Kirkham 2008). An unequal sum present evidence of foul play which warrants intervention. Regarding this test, the auditor needs to check the last transaction and trace it to the accounts payable subsidiary ledger. The trace will reveal the channels through which the accounts payable transactions follow. An advantage of doing this is that it will accentuate if there is any stage in the channel where there seems to be an issue.

Another assertion that is at risk from the case study is that of disclosure or presentation of the accounts receivable. Concerning this, the auditor endeavors to discover if the accounts payable balance has been presented accurately. When these amounts are not presented in an accurate manner, there are several potential outcomes (Klitzman 2011). One of these outcomes is the fact that it could result in underpayment or overpayment of the organization’s suppliers. An inaccurate presentation also means that there is an issue with the system or someone is deliberately causing these discrepancies. In this case study, this assertion is at risk primarily because there are invoices which are unpaid because of inaccurate pricing. That is evidence backing up the notion that there is an issue with the accounts receivable system. Thus, as a senior auditor, that is evidence that requires fast action.

When investigating this assertion, the auditor needs to recheck the financials of the organization. Typically, an organization will list the accounts payable as liabilities of the organization. The accounts payables are purchases of goods by the organizations. Therefore, the accounts payable should be on the list of the cost of goods sold which is subtracted as a cost of operation. If the audit reveals that the accounts payable have not been placed on the right side of the ledger accounts, then it means that there is a wrong presentation and disclosure of the accounts payable. The auditor needs to read the footnotes that underlie every business transaction that involves the account payable (Livermore & Cochrane 2006). That is because the footnotes will lead to the discovery of unusual transactions which have remained undisclosed. Unusual transactions raise red flags because they are unexplained and probably unsanctioned by the organization’s management. Tracing down the unusual transaction could prove valuable because it can lead to the primary source of the problem. Conducting this test will assist in the revelation of the problems that the accounts receivable system of the Peak Sawmill Limited.

Tactics for compliance

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