Part 2: Decision Making

 PLC e-Portfolio Part 2: Decision Making

Mini Case: ACCT – 04

 

Introduction & Problem Identification:

The mini case I chose is Irrevocable Election, the topic focuses on Client Services. In this case, Steve who is a newer member of a CPA firm has to make a decision if he wants to stay loyal to his firm, and partner or stay loyal to the client. While looking at a client’s file that had been prepared months ago, the partner had found that a mistake had been made and an irrevocable election had not been attached to the original return. It is now too late to attach it to the file and this would cause the client to face an additional tax burden for the foreseeable future.

The problem faced in this case is that the partner should have seen this mistake earlier, but he had been out of town when the file had originally been filed and it had not been reviewed by him. The partner believes that it isn’t Steve’s fault, and his plan is to prepare the file for the next year and attach the irrevocable election as if it had been filed on time and suggest that the election had just been lost during the filing process. In doing this the client would never realize the mistake had, but this puts Steve in an uncomfortable position as he can either lie about having filed the election to or he can come clean about his mistake to the client.

Decision Criteria:

The most crucial factor is customer satisfaction is one criteria to consider because if Steve were to tell his client of the mistake made, the client could either be thankful for the honesty or it could go the other way and they may be upset at the firm for the mistake being made in the first place.

Another crucial factor is the CPA firm could be in trouble if clients found out about mistakes that have happened and possible lies about things being filled properly and on time.

While not as crucial Steve and the partner's relationship could be at stake if Steve were to go against what the partner had suggested, because Steve is the newer member of the team his partner should have been keeping a closer eye on his work so the mistake wouldn’t have happened. Also, not as crucial but Steve and the partner could get in trouble with their manager if he were to find out about the plan to lie about the election being filed.

Generate Alternatives:

1.    One alternative would be to take this problem to someone higher up as this may have been a problem before and someone may have a solution on the best way to solve this problem.

2.    Another alternative solution would be for the partner to deal with this on his own and not make Steve decide on what happens. The partner had already said that this is not Steve’s fault therefore Steve shouldn’t be the one to have to make the decision.

3.    Another alternative solution would be to bring what their partner's “solution” is to the manager. Steve doesn’t seem to completely agree with what the partner suggests and the partner's plan could be seen as unethical, Steve could take it to the manager or someone higher up in the CPA firm.

Evaluate Alternatives:

The first alternative would probably be better for the firm. Not trying to hide the mistake made would also look better for Steve and the partner as they wouldn’t be coming off as sneaky and lying about the client's files. This alternative would be best for the relationships of the clients because the right thing would be done.

The second alternative would be best for Steve as he wouldn’t be put into the position of deciding the solution to the problem. The partner admitted that it wasn’t Steve’s fault and with that being said he shouldn’t have to make the calls about doing what is “right”.

The last solution would make it so Steve would have to go behind the partner's back and report him to his manager. This wouldn’t be good for the employee's relationship but might be the best for Steve not getting into any trouble.

Select the Best Alternative: 

The best alternative that I see would be to go to a higher-up to help with the problem. This alternative would be in the best interest of Steve, the partner, and the firm. With a higher-up being made aware of the mistake in filing the client's tax return, it would make sure that nothing illegal or sneaky is happening. The client would most likely be made aware of the situation because that is the most ethical thing to do. Working on a solution to the problem with the client would look better for the firm as it is less likely that any complaints would be made if the client is aware that the firm has her best interest in mind and is looking to do the right thing.