200101 Accounting Information : Ethical Assessment Answers

4. The following alternative courses of action, which you could take, have been identified. 

(a) Declare an interest and step outside of the decision-making process for this particular tender.

(b) Declare an interest and remain part of the decision-making process and complete your recommendation for your company.

(c) Don't declare an interest and continue to do your job by making a recommendation. 

You are a small business owner who wants to enter an overseas market. You arrange to meet with a government official of the country you wish to do business with, in order to discuss your market entry. To be successful, you really need his support. During the discussion, you realise that he expects a monetary payment in exchange for his help.

I. Determine the three key facts of the case.

2. Determine the DLit ethical issue in the case.

3. Determine the ethical principles of the case.

4. The following alternative courses of action,which ou could take, have been identified. 

• Make the payment.

• Don't make the payment. 

You are an accountant with Maxim Ltd and are confronted with the following situations: 

(a) You are appointed the auditor of Baba Ltd, a producer of golf equipment. While on the premises carrying out some audit work, you are offered a new set of golf clubs in appreciation of your work to date. 

(b) You work for a lending institution and one of your friends has approached you for a loan. Your friend has been unable to obtain a loan elsewhere. You approve the loan for your friend. 

(c) You are on the local council works committee. It is considering a number of tenders for a park upgrade. Your best friend has submitted a tender, and you argue strongly in favour of that tender. 

Requirement:

For each of the above situations, state the one relevant APES 110 Code of Ethics for Professional Accountants principle which has been breached and briefly explain why. 

Part A

Requirement

1.Two key facts of the case are as under:

The management of the company is to take a crucial decision on accepting the tenders being submitted by different companies.

2.Two key ethical issues involved in the case are given as follows:

3.The three ethical principles at risk in the case are given as below:

4.In the first case, the principles of ethics such as independence, integrity, and objectivity would remain intact. There will not be any ethical issue because the manger has made discloser of his interest and it also absconds from taking part in decision making. In the second case, the manager only makes discloser of his interest while continues to take part in decision making. In this situation, although he has shown honesty but there is no concrete evidence that he will take the decision honestly because he is still involved in decision making process. In the case three, there will be straight forward questions on the independence, integrity, and objectivity of the manager (CCH Australia Limited, 2009).

Part B

1.Three key facts of the case are given as below:

1. Entry into the overseas market is sought by a small business owner.
2. Meeting with a government official of the country is essential to enter into overseas market.
3. The government official is asking for money to extend help.

2.The government official is asking for bribe to perform services to the business owner. Therefore, the ethical issue before the small business owner is that whether he should pay the bribe or not (Blake and Gowthorpe, 2005).

3.The principles of ethics in the current case are listed as below:

1. Integrity: The principle of integrity requires the government official to act honestly in the situation.
2. Professional behavior: This principle requires that the behavior of government official as well as that of business owner must be professional (CPA, 2017).

4.In the first alternative course of action, the business owner decides to make the payment of bribe to the government official. Under this alternative course of action, the business owner might be able to get his business through but there would be breach of ethical principles. Conducting the business unethically affects its longevity. This means that the business owner must be prepared to face problems in future. Under the second alternative course of action, the business owner decides not to pay bribe to the government official. Under this alternative, it is possible that the business owner might face some difficulties initially while setting up the business but once it is set, the business will run smoothly without interruptions of the government officials.

Part C

2.(a).The code of ethics requires that an accountant should act independently and he should maintain integrity. In the current case, the auditor of Baba Ltd has been offered freebees in the form of free set of golf clubs. The acceptance of freebees by the auditor would affect his independence and integrity adversely. Thus, it could be inferred that the independence and integrity principles of code of ethics APES 100 have been breached (CPA, 2017).

(b).The principles of code of ethics require that the accountant should maintain standard professional behavior. The decisions taken by the accountant must be based on the professional judgment. In the current case, the accountant has sanctioned the loan to his friend when he failed to raise it from anywhere else. It postulates that the accountant has not worked professionally in the matter (CPA, 2017).

(c).The principles of code of ethics require that the accountant must be objective while taking decisions. In the current case, the accountant has approved the tender of the firm which is owned by one of his friends. In this case, it is quite clear that the accountant has not worked objectively. Thus, the ethical principle of objectivity is being breached in this case (CPA, 2017).

References

Marley, S and Pedersen, J. 2015. Accounting for Business: An Introduction. Pearson Higher Education AU.

CCH Australia Limited. 2009. Australian Master Accountants Guide. CCH Australia Limited

Blake, J. and Gowthorpe, C. 2005. Ethical Issues in Accounting. Routledge.

CPA. 2017. An Overview Of Apes 110 Code Of Ethics For Professional Accountants. [Online]. Available at: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/ethics/an-overview-of-apes-110-code-of-ethics.pdf?la=en [Accessed at: 07 August 2017].

ISA 200. 2007. Overall objective of the independent auditor and the conduct of an audit in accordance with international auditing standards. [Online]. Available at: https://www.ifac.org/system/files/meetings/files/3393.pdf [Accessed on: 07 August 2017].