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To resign or to serve Background of case: The Prairieland Bank was a medium-sized, Midwestern financial institution and their management have a good reputation for backing successful deals. Since their profit was decrease, it has caused their management start to renegotiate many loans. Ben Hunt who is the audit partner on the Prairieland Bank was concern to give an opinion on the fairness of their business financial statement. This is because the provision for doubtful loans is too low even they have taken many loans. During the interview to discuss this problem with the CEO and Vice President of finance, he was told that they already know it but they didn’t want to increase the provision as their profit will decrease. In addition, Ben was told that they had approached a company that provided insurance to protect their leased equipment. So, any default on their loans was made up from the insurance company and because of this too they didn’t want to increase their provision loans. Due to this problem, Ben has find James London which his senior partner on his firm to seek consultations from him. They decided that the best course of action was to visit the client and indicate theirs intend to resign, which they did. By coincidence, James meets Jack Lane who held responsibilities similar to his own at one of the competing firm. Jack is actually is a new auditor who replace their position in Prairieland Bank.

Issues from the case: The issue from this case is whether James should resign or serve to the Prairieland Bank. If James resigns, this will give benefit to the Prairieland Bank as they could increase their profit by taking more loans. In addition, they can adjust their provision for doubtful loans to the low amount so this will not affect their profit. Supposedly, the provision of loans should increase as they have taken more profit but they ignore it because they know this will decrease their profit. Even they know their action is illegal or not comply with...