This case provides students with an opportunity to examine ethical issues and challenges encountered in public accounting. This real-life case occurred in South Africa, where wide-spread corruption and unethical behavior severely affected a global accounting firm. 

Due to the resulting negative publicity, the firm suffered significant reputational damage, both in South Africa and globally. In addition, the audit regulator and professional accounting society initiated investigations into the firm’s client engagements, key personnel, and governance procedures. As a result, the firm implemented a major transformation of management structure, governance, and audit quality procedures in order to restore it’s reputation and avoid such problems in the future.

Students are required to research and critically analyze issues and perspectives related to the accounting firm’s activities, with particular focus on the affiliate firm in South Africa. However, the issues involved are universal and are encountered by accounting firms in countries throughout the world. 

The case has several learning objectives, including improving knowledge of: the value of auditor independence in ethically challenging situations, the importance of ethical behavior to a global firm’s reputation and public trust, as well as specific steps firms can implement to promote ethical conduct and improve firm governance. Additionally, the case helps students understand how professional skepticism can help identify ethical misconduct. 

The case can be used in undergraduate and graduate level Auditing, Forensic Accounting, International Accounting, Accounting Policy and Ethics courses.

Learning from Ethical Violations in Public Accounting: A South African Audit Scandal and a Firm’s Transformation

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 AAA 2020 Virtual Annual Meeting and Conference on Teaching and Learning

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