Ethics discussion: Internal controls

Leah Corbin, CPA, is an assistant to the controller of Beartooth Consulting Co. In her spare time, Leah also prepares tax returns and performs general accounting services for clients. Frequently, Leah performs these services after her normal working hours, using Beartooth Consulting Co.’s computers and laser printers. Occasionally, Leah’s clients will call her at the office during regular working hours.

Discuss whether Leah is performing in a professional manner.

My Response: 12 Sep 08 11:10 AM MST

Initial Post: Jill Stidd

I feel that this is not a professional attitude as a CPA. I think that there are two points to consider here that are important for this discussion. First, our text defines capital and revenue expenditures, “once a fixed asset has been acquired and placed in service, expenditures may be incurred for ordinary maintenance and repairs. In addition, expenditures may be incurred for improving an asset or for extraordinary repairs that extend the assets useful life. Expenditures that benefit only the current period are called revenue expenditures. Expenditures that improve the asset or extend its useful life are called capital expenditures.” (Warren, Reeve, and Duchac. P. 9,10)

The discussion says that Leah frequently uses the computer and printer to work on private clients after hours. It does not say if she has permission to do this, if so then that is a different story all together. If she does not have permission then she is adding to the wear and tear of the equipment that could add to accumulated depreciation and affect the assets on the balance sheet for the company she works for. If she creates a situation that the printer goes through more ink (which by the way is very expensive, or needs a minor repair then that would affect expenses which would effect the income statement and net income for the company.Second idea to look at, should not Leah as a CPA create her own company that purchases her own equipment so that she can garner the tax benefits that the company she is working for gets with deprecation and expenses?

Not only is she not very ethical and professional here, she is not a very smart CPA if she is letting the company she works for get all the tax benefit that she could acquire if she created her own business.As far as the phone calls go at work, in most places of business the policy is stated in the handbook that there should be no personal phone calls, so again this is highly unprofessional.Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.