Describe an occasion on which you had to demonstrate ethical behavior.

During my two years spent in an audit firm I have encountered several situations in
which I had to consider several ethical issues. In most of the circumstances it was
quite easy to demonstrate ethical behavior and to comply with the firm’s internal
regulations.

However, I have recently encountered a very difficult situation. I was working for a
client in the mobile phones industry. The audit team was composed of four people: 1
beginner assistant; 2 experienced audit assistants (I was one of them) and one
semi- senior.

I had not previously worked with that particular semi – senior, so I prepared all my
work according to the company’s audit procedures, which comply with the ISA and
also with the National Standards. Since I began working in the firm I had never
received serious complaints from the seniors or managers with whom I had been
working.

This is why I was very surprised when the semi – senior I was currently working with
gave me back all my working papers after briefly revising them and asked me to
perform additional substantive tests which were in disagreement with the Audit
Procedure. I was even more surprised when she asked me to delete some of the
substantive tests I had already performed, allegedly because they were not required
by the procedures. Although I knew I had performed my tests according to the
procedures I checked the latest up-dated versions once again and tried to reason
with her and show her that my sample sizes had been correctly computed. The
same thing happened to my colleagues. We all tried to reason with her, but should
not accept our opinions.

One more serious problem that my colleagues and I had with this senior was that
she spoke of our materiality levels in front of the client. This kind of behavior is
completely considered inappropriate as the client might try to modify the financial
statements to his/her own advantage.

After all the above had happened and neither me nor my colleagues could reason
with the semi senior I decided to talk to the manager in charge of the client. I did
this because I believed that unnecessary time consuming substantive tests were not
in the interest of the firm. Furthermore, I considered that the semi – senior ought to
have known thoroughly the audit procedure in order to perform her duties correctly.
Most of all I have done this due to the fact that she talked of confidential information
in front of the client, which is inappropriate.

Although I knew that there was the possibility that the manager would not listen to
me or worse, I came forth with the problem because I knew this was the right course
of action. I presented the case objectively to the manager, who understood the
situation, and confessed that there had been similar complaints from other
assistants regarding this semi – senior. The manager agreed that I had performed
my tasks correctly and that my working papers complied with the audit procedure.

What did you learn from this experience and how will it influence your
future behavior in the workplace?

I have learnt a lot of things from the experience with that particular senior. I
developed my self – control. It was not easy being patient with a person that
challenged the work papers that complied with the audit procedures. It was also
challenging to try to reason and explain to her the outlines of the audit procedures
that my colleagues and I applied.

I have also improved my diplomacy skills. As I mentioned the semi –senior did not
have people skills so she usually tried to bully my colleagues and me from time to
time.

I learned how to better communicate with the client. The semi – senior did not
collaborate easily with the client either, so, in order to obtain the information
needed for the audit my colleagues and I had to seriously practice our negotiation
skills.

I have also learnt that in such cases it is of the outmost importance to speak with
objectivity and present matters as they are. If this condition is not respected than
the actions might seem pernicious.

The most important thing that I have learnt from this experience is that I should not
be afraid to stand up for myself and for what I believe in especially when my opinion
is supported by documentary evidence. It would have been easier to perform the
unnecessary additional substantive tests, and deleted the ones that she did not
consider necessary, but it would not have been correct.

In the future I will always remember this experience when faced with ethical issues,
either in my professional or private life. I will focus on following the correct ethical
path and whenever in doubt I will seek advice from my workplace mentor, the
ethical partner in the company or an independent professional body (such as ACCA)
depending on the situation.

What would have been the impact had you not behaved ethically in this situation?

If I would have performed all the unnecessary tests and deleted those indicated by
the semi – senior, my work papers would have been revised firstly by the semi –
senior and secondly by the manager. The manager would have noticed the fact the
materials did not comply with the audit procedures. He would have then sent me
back the papers and he would have given me a substandard evaluation.

Another result would have been that the field work would have taken much more
than initially scheduled. This would have been counter – productive, and additional
fees might have been requested from an already financially challenged client. The
client would have not been satisfied nor by the prolonged audit procedures nor by
the escalated price.

Moreover, if I would have continued with the incorrect approach some material
misstatements could have gone completely unnoticed and the unqualified audit
report might have been issued. Should such a situation have occurred the impact
would have been great on both the client and the audit company. If the potential
scandal had reached epic proportions the impact would have been great on the
audit profession and the professional bodies’ reputation as well.

Another fact is that the semi – senior would have continued to perform the audit
field work by applying incorrectly the audit procedures, had the manager not been
informed of this issue. This might have also lead to material misstatements being
overlooked or unnecessary audit tests being performed thus prolonging the field
work and increasing the audit fees, at the expense of the client.

The semi senior would have also continued to discuss about the materiality levels in
from of the clients. This is kind of behavior is considered inappropriate as the client
might try to manipulate the financial statements to his/her own advantage.

As I mentioned before she did not communicate efficiently or easily with the client
and the client’s FD started to resent this fact. Had I not brought forward the issue
the firm could have lost the client.

After I have presented my case the semi – senior changed her professional approach
and started to have a better relationship with both the client and the audit team.
She revised the company’s audit procedures. However her work was closely
supervised by the manager in charge.