Bill De Burger
- What conclusion do you believe Bill DeBurger reached in his inventory memo? Put yourself in his position. What conclusion would you have expressed in the inventory memo? Why?
I am opined that Bill drafted a conclusion that highlighted all the material aspects while conforming to the required accounting principles. From a personal perspective, I would strive to follow the audit protocols for the financial period. In this regard, I will report any immaterial errors that I locate in Marcelle’s inventory in the memo. Besides, I believe that Bill’s comprehensive examination of the inventory account for 900 hours was enough to reveal whether there were errors or fraudulent transactions. If errors were there, Bill and the other auditors would have realized it. Also, Bill is the one who is supposed to sign off the inventory memo as an in-charge accountant. Thus, the overstatement of $72,000 that he identified on the $50M inventory could have been a potential concern and likely put him in trouble (Case 6.2. n. d.). He had also expressed concerns about potential closure to his supervisor, but it is indefinite whether he should investigate the rumor to determine if it caused the material misstatement.
- Would you have dealt with your uncertainty regarding the inventory account differently than Bill did? For example, would you have used a different approach to raise the subject with Sam Hakes?
Yes, I would have used a different strategy to bring the subject to San Hake’s attention. I am opined that Bill is not straightforward. I will talk to Sam and explain to him every detail of my findings and why it is challenging to write a conclusion. I will ensure that we discuss the implications of making a wrong conclusion and make him approve of what will be in the memo. The approach is likely to pay off based on Sam’s vast experience with audits. Hence, he will direct me on what to do and write. I would not have waited until the last minute to tell Sam about my concerns; I would have discussed them earlier during the audit. In doing so, I will not but Sam in a difficult position.
- Evaluate Sam Hakes’ response to Bill’s statement that he was unable to sign off on the inventory account. In your view, did Sam deal with the situation appropriately? Was Sam’s approach “professional”? Explain.
Sam is a senior accountant, and Bill is required to report him as he did. I am opined his reaction was unpleasant but not unreasonable nor unprofessional. He was overwhelmed with the news that his junior could not sign off the inventory memo despite spending 900 hours in the audit. The only concern with his reply was not providing an alternative, but this can be explained from his junior’s delay. He waited until the last minute to articulate the financial difficulties he was experiencing to his supervisor. Besides, Sam was working under his bosses’ pressure and could not afford any mishaps in the last minute.
- Is it appropriate for relatively inexperienced auditors to be assigned the primary responsibility for such critical accounts as Marcelle Stores’ inventory? Explain.
A large store like Marcelle with enormous accounting and auditing operations should assign inexperienced accountants such as Bill to do particular tasks. In this regard, the firm ought to assign the most experienced and competent employees to do the audit. From a strategic position, assigning in-charge employees can be justified due to inadequate human resources. Auditing is detailed and broad and should reflect the finding of multiple professionals. Thus, Bill’s assignment to the task can lead to inaccurate findings, but this was countered by collaborating with other audits.
Reference
Case 6.2. Bill De Burger, In-Charge Accountant.