The Case of Empty Promises

Rule 501 : Acts Discreditable

Respondent: Mr.. Magoo
Complainant: Mr.. Haughty

In a letter to the ICPAS, Mr.. Haughty expressed a number of complaints against Mr.. Magoo. Mr.. Haughty hired Mr.. Magoo to do accounting services for his new business starting in August 19xx. At the end of the year, Mr.. Magoo requested year-end information to complete the "books". Mr.. Haughty provided Mr.. Magoo with the year-end information during the early part of January. In the first week of February, Mr.. Haughty called Mr.. Magoo to obtain a progress report. Mr.. Magoo stated that he would have the books done in about a week. Two weeks later, Mr.. Haughty called Mr.. Magoo, and Mr.. Magoo said he was busy and that the work would be done in a few days.

At the end of February, Mr.. Haughty again called Mr.. Magoo. Mr.. Magoo said that his secretary had made an error, that she had been fired, and that Mr.. Magoo would personally complete the books within a few days. Mr.. Magoo called Mr.. Haughty on the 15th of March to tell him to send a check for estimated taxes.

Mr.. Haughty decided to hire another accountant. On March 27th, Mr.. Haughty sent his new accountant to Mr.. Magoo’s office to pick up whatever work was done, with the intention of completing the year-end accounting. Mr.. Magoo refused to release materials because he wanted to finish what he had started.

On April 2, Mr.. Haughty went to Mr.. Magoo’s office to demand his books. Mr.. Magoo was still not done, and Mr.. Haughty gave him two days to finish the job or release whatever he had. Two days later, Mr.. Haughty picked up his materials and gave them to his new accountant.

Mr.. Haughty had subsequently discovered that Mr.. Magoo was supposed to prepare quarterly Profit and Loss Statements and a Balance Sheet. Neither was completed. Mr.. Haughty also gave Mr.. Magoo a new software program called Quick Books to use. Mr.. Magoo has not returned it. Mr.. Haughty also said that he paid Mr.. Magoo for accounting services in January and February, but that Mr.. Magoo did not perform any accounting services. Mr.. Magoo has not sent him the money back.

When the investigator questioned Mr.. Magoo about the unreturned software, Mr.. Magoo said that he told Mr.. Haughty that he could have the software back anytime he chose to stop by and pick it up, or pay for postage to have it returned by mail.

As per the accounting fees, Mr.. Magoo said that he did complete the monthly closings and monthly sales tax returns for January and February. Also, he incurred time spent in meetings with the successor accountant. Mr.. Magoo refunded a portion of the fee to Mr.. Haughty. Mr.. Haughty confirmed the refund.

Both sides were partially at fault for this situation. Mr.. Magoo had promised to perform certain work and did not complete the assignment. However, Mr.. Haughty had somewhat mislead Mr.. Magoo as to the scope and difficulty of the project. There were numerous conversations and a great deal of animosity had built up. Mr.. Haughty had not been harmed in this situation and in the end the "breakup" was viewed as fair and equitable.

In evaluating the situation, the investigator indicated that while there were lapses of good business practices, there was no violation of any professional standard, and no violation of Rule 501. The case was closed.


If you are unable to finish a job in a timely manner, be honest about it. Making empty promises only serves to aggravate your client. If need be, give up the work to another party so that your client does not suffer as a result of your business. Be wary of clients that want more than they ask for. Make sure the scope of the work is clearly defined before you begin a project.

Special thanks to Dr. Howard A. Kanter of the DePaul University School of Accountancy
and the ICPAS Ethics Committee for developing and maintaining the Ethics Case Studies.