Tommy O’Connell is an audit senior who engaged to do audit on Altamesa, the manufacture steel girder company. To learn more about Altamesa, Tommy discuss with Casi McCall, The audit senior on the Altamesa job the two previous years. According to Casi, Altamesa’s management took aggressive positions regarding year-end expense accruals and revenue recognition. The company used the percentage of completion method to recognized revenue since its sales contracts extended over two or five years. Casi recounted several disputes with the company’s chief accountant regarding the estimate stage of completions of jobs in progress. In an effort to “front load” as much of the profit on jobs as possible, the chief accountant typically insisted that jobs were further along than they actually were.

Before begin his work at Altamesa, Jack Morrison asked Tommy to bring Carl Wilmeth as his staff. Carl is new staff accountant, he just hired for few month. Tommy did not appreciate Carl’s cocky attitude, and his lack of experience made him a questionable in mind for the Altamesa engagement. He heard about Carl performance from senior who had supervised carl, that he not completed all of his assigned audit procedures, this case make the senior to have difficulty confirming their suspicions.

The Altamesa audit was in full swing. Tommy is busy trying to untangle Altamesa’s complex method allocating overhead cost to jobs in process. So he did not time to review Carl’s work papers. Tommy held interview with the chief accountant of Altamesa. He found that Casi had been right: the chief accountant clearly meant to recognize profit on in progress jobs as quickly as possible. To comprehend Altamesa’s accounting decisions for its long term contracts, Tommy spent several hour of nonchargeable time to flipping through copies of jobs order worksheet and contracts. Tommy and Carl Worked 50 to 60 hours per week on the Altamesa engagement. Tommy work hard to earn recognition as “superstar” senior. Even he sacrifices the time with his wife.

Finally, Late August the Altamesa job was complete. Jack Morrison give appreciate to Carl’s work,because he never seen staff did clean and organized workpapers. But in fact, Carl’s performance is not really good. Tommy had planned to discuss Carl’s job performance with Morrison. But he was reluctant to do so. Tommy realized that as Carl’s immediate supervisor, he was responsible for that work.

Key Fact:

Altamesa’s management took aggressive positions regarding years-end expense accruals and revenue recognition.

Carl was a staff accountant with only few months’ experience. He coming in well under budget on his assigned task. Carl had completed an assignment in less than 60 hours when the audit budget allotted 100 hours. Senior who had supervised Carl suspected that he had completed all of his assigned audit procedures.

Each time Tommy asked regarding an important issue. The Chief accountant registered his disgust by pursing his lips and running his hand through his hair. He then responded with a rambling, convoluted answer intended to confuse rather than inform.

Tommy had planned to sit down with Morrison and talk to him regarding Carl’s job performance. But he was reluctant to do so.

1. The role of an audit senior is more important. According to GAAS of field work that auditor must adequately plan the work and must properly supervise any assistant. Audit Senior :

Lead client audit engagements, Obtain a thorough understanding of PCAOB and generally accepted auditing

standards, audit procedures and techniques. Supervise, train and mentor associates and interns on audit process. Research and analyze financial statement and audit related issues. Acquire a working knowledge of the client’s business. Proactively interact with key client’s management to gather information, resolve

problems, and make recommendations for business and process improvements.

This requirement will makes an audit senior more stressful because the responsibility to properly planning the audit and designing the audit approach. This useful to enable the auditor to obtain sufficient appropriate evidence, keep audit cost reasonable, and avoid misunderstanding against client.

Staff Accountant : Perform a variety of public accounting duties with general knowledge of most areas

of practice Interact with clients to help audit team efficiency. Communicate auditing matters and problems to Senior Associates, Managers and

Partners. Acquire a working knowledge of the client’s business.

2. I will reject Carl as my assistant. Because as auditor whether it’s senior or staff, must have adequate technical training and proficiency to perform audit. Requiring the auditor to have formal education in auditing and accounting and adequate practical experience.

3. I will do the more important thing which is the issue facing the client. After I complete the issue it’s time to evaluate Carl’s work performance. To confirm my suspicious against Carl I will use report that Carl is not do the jobs according to audit plan and audits procedure. Because Audits Standard requires the auditor to accumulated sufficient appropriate evidence. Without following the audits procedure the quality of evidence will decrease.

4. Yes I have responsibility to inform Morrison about my suspicion regarding Carl. Because as a professional I should have ethic to tell the fact or truth. “According to rule 102 – Integrity and Objectivity In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflict of interest, and shall not knowingly misrepresent fact or subordinates.”

5. I will check if its issue about Carl it really true or not. If it’s real happens I will fired Carl from the accounting firm.