Tax return complications

Tax return complications : 

Tax return complications By Amanda Wilson

Bill Adams : 

Bill Adams Senior tax manager at Hay & Hay accounting firm Client – Zentor, Inc. Very important for prestige & fees CFO of Zentor, Inc. Dan Good working relationship Recommendations Dr. Rim (Dan’s brother)

The Tax Return : 

The Tax Return Prepared by a junior tax professional Gross billings was $480,000 Net income was only $27,000 Concern? Disclaimer noting all numbers come from client

Other Noted Problems : 

Other Noted Problems $15,000 for meals and entertainment Drying cleaning bills for shirts, suits, dresses, sweaters, etc. Wages of $100 per week paid to Dr. Rim’s twelve-year-old son

Dr. Rim’s Reaction : 

Dr. Rim’s Reaction Bill confirmed his suspicions Asked Dr. Rim to remove all personal items Became defensive Said he had been doing it for years Other accountant told him how to do it The Threat Get Zentor, Inc. involved

In the mean time… : 

In the mean time… Zentor, Inc. missed a deadline Additional $1,200,000 in taxes Bill’s associate agreed to help avoid tax due Notice of Objecting will still get processed using previous due date It is the weekend Big decisions to make

Ethical Issues : 

Ethical Issues Decisions Take off personal expenses Back down from doing tax return Put information on tax return Decisions Post date important document Make company pay additional taxes Dr. Rim Zentor, Inc.

Ethical Issues : 

Ethical Issues Is Bill following the Principles in Codes of Conduct for Professional Accountants? Maintain good reputation Integrity Not associated with any misleading information Conflict of Interest “Binding the rules” Admitting to wrong doing Making the right judgment call

What should be done? : 

What should be done? Fix overstated problems on tax return Take salary for son off Suffer the consequences if problem arises Admit wrong doing To hide or not to hide? Protect Zentor, Inc. Dr. Rim Zentor, Inc.

Using Courage… : 

Using Courage… Speak up Bill did this Follow Codes of Conduct Eliminated conflicts of interest Take the bad with the good

Conclusion : 

Conclusion Because these two problems run together and at the same time, Hay & Hay and Bill Adams have big decisions to make. They could look at losing a very important client Do what is ethical There are more fish in the sea Not willing to take the chance Making the right decision could be costly but in the long run, you will feel better about yourself.