Alternatives available in decision-making situations

¶ … alternatives that are available to you in this situation.

Given the suspicious behavior of Carl Wagner, the most ethical and wise action for an auditor would be to refuse to agree to validate the audit until more information was disclosed by Dataserve, Inc. Specifically, the auditor should demand to know why Wagner refused to put his signature to the audit containing the company's financial statements, why he is leaving the company and further clarify Wagner's reference to the company as 'crazy.' As Wagner is Dataserve's financial vice president, he is likely to possess particularly pertinent information that might not have come to the auditor's attention. "It should be the clearly defined policy of any audit team that there are no surprises involved with the audit at any time. An audit is no place for 'cloak and dagger tactics,' 'witch hunting,' or the identification of situations which are sprung at a critical time. Ethical audits require full disclosure of any finding (or observation) with responsible members of the audited organization to test its validity prior to formal exposure at the post-audit (exit) conference or formal audit report" (Baysinger 2008).

To uphold the auditor's professional integrity, he or she cannot simply allow Wagner's vague comment about 'craziness' to go ignored. Not only Dataserve's reputation, but also the reputation of the auditor's firm is at stake -- as well as his or her own professional reputation and future. Wagner's actions are blatantly suspicious, as he refuses to make a commitment sign the representation letter and seeks to distance himself from the company. The auditor should state that as he or she has been 'aboveboard' in all of his or her own dealings with Dataserve, he or she has the right to expect the same treatment from the company.

At present, the auditor cannot discern why someone who worked so closely with the firm is refusing to validate the auditor's results. The evidence seems to support the conclusion that there is the risk that something has been hidden from the auditor's knowledge that Wagner is unwilling to disclose. Even if this is not the case, there is no embarrassment on the part of the auditor in being overly scrupulous. There is far greater risk in taking no action.

Two options exist for the auditor in this scenario. The auditor can tell him or herself that he or she need not be concerned, given that Wagner and the other managers at the company did not volunteer the troubling information. At present, the data available to the auditor makes it seem as if the company is aboveboard. But should Dataserve's financial dealings come under scrutiny by the public eye, this defense is unlikely to stand up either in a legal court or the court of public opinion. The financial reputation of the auditor's firm is likely to be in jeopardy if he or she goes through in signing off on the information and says the audit is valid, despite Wagner's insinuations. The auditor should demand further information. In short, if Wagner is afraid, so the auditor should be afraid as well!

b) Express your personal opinion as to the appropriate course of action and provide reasoning to support your opinion.

Ethically speaking, simply not knowing something because of a refusal to investigate is no excuse for ignoring potential irregularities at a firm. Thus, demanding more knowledge of the company before the audit is submitted seems wise. The auditor should, under all circumstances, demand to receive more clarification, even at the conclusion of an audit, if more information is revealed that calls into question the data.