American Institute of Certified Public Accountants (AICPA) Practice Exam

How should a member handle pressure to adjust financial entries?

1. Comply to maintain job security.

2. Refuse and seek legal counsel.

3. Discuss with peers before deciding.

4. Document their decision and escalate matters.

The correct answer is: Document their decision and escalate matters.

When faced with pressure to adjust financial entries, documenting the decision and escalating matters is the most appropriate course of action. This approach serves to protect the member's integrity and adherence to ethical standards within the profession. By documenting the decision, the member creates a clear record of the situation and their response, which is crucial in case there are future inquiries or investigations regarding the financial records or the pressures applied. Furthermore, escalating the matter means notifying a supervisor or another appropriate authority, ensuring that the issue is addressed at a higher level within the organization. This step not only highlights the seriousness of the pressure being applied but also helps safeguard the organization from potential risks associated with unethical financial reporting. In contrast, complying with the pressure may compromise professional integrity and could lead to significant legal and reputational consequences for both the individual and the organization. Seeking legal counsel might be seen as too reactive and could complicate the situation; while discussing with peers can provide support, it may not address the need for formal action regarding unethical requests.