a). Ethics related to classification of uncollectible: The primary purpose of a review (or an audit by an independent CPA is to provide people outside of the organization with an independent expert opinion on the fairness of the presentation If Gamm believes the receivable from Rembrant should be written off, he should insist that it is-or make clear his reservations in his report. Beta's budget of future operating results has virtually nothing to do with the collectability of this receivable The fact that writing off the Rembrant account may force Beta out of business is indeed unfortunate. But CPAs cannot "turn their heads' just to keep a failing client in business, or their reports would have no credibility in the business world Like umpires, CPAs jobs are to "call 'em as they see 'em Gamm won't have to worry about collecting his fee, because this engagement probably has reached an early end A company seldom engages a CPA to conduct a review (or audit) when it knows in advance that the results will be unsatisfactory The company would not find the CPA's report useful, yet completing the engagement would add another creditor to the company's list Instead of arguing, the parties to this dilemma should cooperate. Actually, the last thing most banks want is to foreclose on assets-they would much rather find some way of getting repaid Price and Gamm might together meet with Beta's bank and discuss the situation Yes, it appears that Beta will temporarily fall into violation of the loan agreement But perhaps there is a better way to work things out than to put Beta out of business.