Saskatchewan Institute of Applied Science and TechnologyHEALTH SCE 123

Laura has been working in the accounting office of Pearson Physicians Group for five years. She has always been a good worker and is known for her meticulous work ethic. Laura has received a written notice from the bank indicating that the? office's main bank account has been overdrawn. In just one? week, the overdraft charges have accumulated to? $375. Upon? investigation, she realizes that she deposited the last deposit into a subaccount rather than the main bank account. The money can be transferred to the correct bank? account, but a transfer requires the signature of the office manager. Laura is embarrassed about her mistake and is not sure how Kathy will react to the news. When she has a chance to meet with? Kathy, Laura places the transfer slip in front of Kathy and? says, ?"A mistake was made during the last deposit. I need you to sign this and? I'll take care of it from? here." Kathy inquires about the circumstances behind the? mistake, and Laura? explains, ?"I realized that money was deposited into a subaccount rather than the main account.? Don't worry; I have the situation under? control."

 

Kathy? responds, ?"How did you realize that the money was deposited into the wrong? account?" Laura realizes she must now reveal the entirety of the? situation, including the overdraft charges of? $375. Disappointed, Kathy asks? Laura, ?"How were you planning on accounting for the? $375 in overdraft? fees?" To? this, Laura? replies, ?"Oh, I? don't know. I guess the office will have to cover those charges.? I've never made a mistake like this before. There? isn't much that I can do? now."

 

1. Review the first boldface statement. Was? Laura's response to Kathy appropriate when she inquires as to the circumstances behind the? mistake?
2. Review the second boldface statement. Did Laura respond appropriately to Kathy when asked how she was planning on accounting for the? $375 overdraft? fee?

Answers:

1. Yes. Laura's response to Kathy was just appropriate because it indicates integrity. She was straightforward and honest about what happened behind the mistake.

2. No. Laura's response to Kathy shows lack of professional behavior and professional competence and due care.  Her response to the problem displays unprofessional reaction and it shows that she is not willing to take full responsibility on the mistake she made. She didn't critically assess the issues to form a professional judgment and create an appropriate solution. Instead, she used her personal judgement for the sake of her personal interest.

Step-by-step explanation

• Aside from objectivity and confidentiality, integrity, professional behavior and professional competence and due care are one of the fundamental principles should a person in accounting profession to possess.

Explanation:

1. Having an integrity means that the company's accounting practices all conform to the set of principles of GAAP or IFRS.  Integrity requires an accounting practitioner to be honest and straightforward within it's professional service. Public trust should not be destroyed because of personal gain and advantage. Being in the service of providing significant business information, an accounting practitioner should exercise integrity at all times. If a person with questionable integrity provides information, it will not be considered reliable and relevant information.

Therefore, in the first boldface statement, Laura had an excellent job because she didn't doubt to admit the circumstances behind the mistake and was straightforward about it.

2.

• To exercise professional behavior, an accounting practitioner should maintain a good reputation so as to preserve the reputation of the profession and refrain from any acts that may bring discredit to  the profession.
• An accounting professional should also perform professional competence and due care. Professional competence includes the ability to execute an analytical approach and process appropriate with any concerns or matter and apply professional judgment regarding technical subject matter under consideration. ( Competence is skills, aptitude, expertise.)
• Practicing due care represents the ability of the professional to exercise competence with utmost care in performing it's services. It involves proper attention and diligence in carrying any matter or concerns.

If we based the second boldface statement from above information, it definitely shows that Laura is failed to exercise professional behavior because her statement could affect negatively on the reputation of the general accounting profession. It might bring discredit to the profession because the way she responded is not adhere to the valuable ethics of the accounting profession. Her statement demonstrates that she is not willing to be accountable on her mistake and didn't create a plan of appropriate solution to the overdraft charges. Therefore, her response also indicates lack of professional competence  and due care because she didn't use her skills so as her diligence to come up a solution regarding the $375 overdraft fee.