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Will Stallard was a staff auditor at Dykstra, Banister, and Huston (DB&H), a CPA firm in Alabama. His first solo assignment was to audit the Town of Rosedale, where his good friend’s wife, Jessica Randle, was the assistant clerk. After a careful audit of revenue revealed some questionable activity, Stallard was placed in an uneasy situation. His initial audit uncovered a missing cash payment, to an account Randle was in charge of. After being questioned, Randle happened to produce the missing monies the following day. Deep down Stallard knew something was amiss, and he immediately brought the matter to his supervisor, Vince Huston’s, attention.

Further investigation unraveled critical evidence that Randle was stealing cash money from the town by pocketing traffic ticket payments that had been paid in cash. When the investigation was complete, Randle was arrested for stealing $21,000 from the small town of Rosedale, and sentenced to five years in prison. Although initially denying the accusations, Randle confessed after serving one week in jail, and was shortly released to house arrest one month later.

Although a difficult situation, Will Stallard held up his ethical duties as a CPA. He approached the situation with professional skepticism and uncovered the fraudulent activity. It would have been easy to overlook his initial findings, as both Jessica and her husband, “Nacho” were good friends of his. This paper will examine the idea of professional skepticism, the ethics a CPA must abide by, and the various alternatives Stallard could have taken as well as the consequences inherent in them.

Professional Skepticism

Professional skepticism is at the heart of the auditing profession. It is discussed in SAS No. 99, and can be best defined as “an attitude that includes a questioning mind and working practices that encompass a critical assessment of audit evidence” (Kueppers & Sullivan, 2010, p. 291). It is the idea that...