Case study 1
1. For case scenario 1
What are the duties owed by Ming?
Ming answers to Bing Ho, to the company, the stakeholders and the board of directors The duties that Ming takes as an employee are
* Honesty/duty of care
Is there any conflict of interest faced by Ming as an assistant accountant in Wholesalers Ltd? Ming V Bing
Decide to go with Bing’s guide as instructed or record Bing’s fraudulent discrepancy or follow the company’s policy. Yes there is a conflict of interest because if Ming says anything there is a chance that he will be fired. As he is only an assistant accountant and Bing is the chief accountant there is a chance that he will not be believed as Bing is there much longer. (red is my answer) 2. For case scenario 2
Explain any ethic risks and possible consequences faced by Ming when dealing with Alice. Ethical risks:
* Failure to do what was asked of him
* Failure to apply duty of care
* Failure to apply disclosure
* Failure to act ethically
* Misstated financial statement
* False untrue books
* Acceptance from Alice and Bing Ho to follow
* Failure to follow Bing’s instructions
* Loss of Alice’s friendship
* The company suffers
* Breaching Bing’s instructions would lead to Ming being disciplined
Ming might be tempted to tell Alice about her father’s dealings, as this would not be ethical¸ but there is a chance if he says anything to Alice that she will stop going out with him. Comment on Bing’s motto and advice of Ming’s possible actions. Bing’s motto is “being a professional accountant holds the key to all” P12, , Accountants have a duty towards their employer, loyalty to the governing body, and management and the responsibility to ensure such duties are performed with the objectivity, integrity and ethics of a professional person. Internal fraudulent activities.
P13, all accountants are expected to observe the standards of care, professionalism and ethical behaviour as part of their primary professional duty to safeguard the public interest.
3. Taking both scenarios together, what are the ethical and professional issues faced by Ming. Taking both scenarios the ethical issues are that
An accountant’s role is that of performing under tight budget and timelines, maintaining relationships with clietns and firm management, and applying strict accounting rules and professional standards. How would you advise Ming?
Follow the company’s procedure for reporting transactions. Let Ming be disciplined. If Ming decides to record Bing’s discrepancies to the board of directors, objectivity, and integrity and independence are his duties. Technical competency, duty of care, professional issues chapter 3.
P 54 book chapter 2
Alan Bond the sales man
1. He is a stage 2, p44 table.
Which means that he only interested in his own self-interest. From p 42
* Treating the company badly.
* Reduced the credit terms
* Leases terminate without compensation
* Failed to accept the auditors reccomdations.
2. His selfish behaviour, obsession with growth is the primary reason for the demise of the company. His on-going acquisitions, expansion of debts was totally unsustainable. He was more concerned with personal wealth and growth of his empire. The implications of his actions would come to harm others and he did not care so he is a stage 2.
3. As an Auditor there are minimum standards, objectivities and integrity standards. Due care, skill and competence are also primary traits of an auditor. When rating someone as a client, consideration must be given to whether the client poses an unusual unacceptable risk. That would be a client that lacks integrity, and by implication would pose a greater chance of errors on irregularity. The facts are not given correctly or if it remains undetected the auditor faces a great risk of...