Lowell Inc.: Case Summary

Excellent summary of the case study; I did not have to read it to understand what is going on. All the important facts are covered. I just noted how Avis who is initially excited by the fact that she uncovered fraud, and then becomes concerned or disappointed because one of the involved manager, Mo Rappelle, with whom she has become well acquainted. And the fact that Mo backdated sales to increase his year-end bonus by slightly more than $100, which has clearly an immaterial impact on Lowell, Inc.’s operating results the year just ended (Knapp, 2015). Nevertheless, fraud is fraud regardless of the impact on the Business.
Questions
I agree with you that it is not appropriate for Avis to substitute another store for Mo’s store with whom she has become conversant. You made a great point supported by the AICPA Code of Conduct Rule 102 “Integrity and Objectivity”. I would also add Rule 101 “Independence” which states that a member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designated by Council (AICPA, 2015). Because independence is a state of mind, it is difficult to assess, and when an assessment is made, it often needs to be deduced from the actions of an auditor during the conduct of the attest service …show more content…
Wines (2012) states that the independence pronouncements and standards issued by the major professional accounting organizations and regulatory bodies represent their attempts to provide guidance for auditors when evaluating their independence in practice. In so doing, these statements elaborate on the meaning of the concept of auditor independence. However, it may be difficult for auditors to effectively evaluate their independence in practice if their own interpretations (perceptions) of the concept differ from those of financial report users and other parties to the financial reporting communication