Part 1

Select ONE of the scenarios below and explain the best solution. Include comments related to any ethical issues that arise.

Scenario 1

Susan, the owner and president of Frosty Dairy Treats (Frosty's), wanted to sell the business to Delilah's Frozen Delights, Inc. (Delilah's). To provide a basis for the transaction, Susan retained Franklin, an accountant, to perform an audit of Frosty Dairy Treats. Franklin knew that Delilah would use the audit report in making the purchase of Frosty's. Franklin's audit report showed Frosty's to be profitable. Delilah relied on this report in agreeing to purchase Frosty's and agreeing to the terms of the purchase. Sometime later, it was discovered that the accountant had made a number of mistakes and that the business that was sold was actually...