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Tierra Fraud Case

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Assignment Choice #2 – Acceptance of Engagements
Arguments for Accepting Tierra Corporation as an Audit Client Tammy Potter (Potter) of Tower & Tower (Tower) is investigating the potential of taking on Tierra Corporation (Tierra) as a potential audit client, and although Tierra is seen in a very good light in the business community as well as by their financiers and attorneys, there are some skeletons in the closet. It seems that Lew Edmond, owner of Tierra (Edmond) was found guilty of fraud about ten years ago in regards to the sale of some land to a trust that was managed by his daughter, which he attempted to cover up after the fact. Although this is a significant blight on the company, it did occur ten years ago, and there is a possibility …show more content…
It is clear that Edmond has attempted to defraud the IRS in the past, who is to say that he might not try to do it again? If the IRS seems to believe that he is a risk, then wouldn’t any of our work be placed under the microscope? Considering that Edmond is the owner of Tierra, it is inherently more difficult to uncover any potential fraudulent activity that may occur, as the owner of the company has a great deal more avenues to work with to hide significant information about the company’s finances. Further considering the first argument, if we represent a company that has previously been found guilty by the IRS of material fraud, then do we risk our own potential profits and reputation in the professional community if we decide to work with Tierra but in our investigation miss something that could lead to further investigation by the IRS? As previously stated, the owner of a company has more ability to commit fraud than one of its employees. Would we not be better off working with companies that don’t have a negative track record and therefore fly under the radar?
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