AN INSTRUCTIONAL CASE IN THE ETHICS OF THE CPA/CLIENT RELATIONSHIP: THE ROADRUNNER AND HOWARD BEAN, CPA

Abstract

This instructional case examines the relationship between a CPA and his client. The case is suitable for use with upper-level accounting majors (juniors or seniors) as many of these students are likely to enter public practice and therefore are likely to be exposed to some of the ethical dilemmas addressed in this case. As such, the case could be included as a capstone to an advanced accounting course or used in an auditing course to emphasize accountants' ethical responsibilities and the application of ethics in 'real world' situations. Alternatively, if the accounting curriculum includes a specific course on ethics then the case would be suitable for this purpose. This case can be assigned in two ways: (1) as an individual project or (2) as a group project (ideally three or four students). The major objective of this case is to enhance students' understanding of an accountant's legal and ethical duties to the client. In this case, three legal areas are analyzed: contract law. tort law (fiduciary duty) and tort law (professional negligence/malpractice). This case is based on facts that were presented before an accounting body's professional disciplinary committee, and examines a number of dealings between a CPA and a small business client. The issues examined include: the acquisition by a CPA of a client from a former employer, the withdrawal of fees for accounting services without express client approval, and the provision of inaccurate client financial statements. Another focus of this case is to enhance students' understanding of an accountant's legal (contract and tort law) and professional ethical (code of conduct) duties owed to the client.