ACC2CAD COST ACCOUNTING AND DECISION MAKING
SEMESTER 1, 2011
MINI CASE STUDY 1
DISCLOSURE OF CONFIDENTIAL INFORMATION; ETHICS
Page.3 Executive summary
Recommendations and conclusion
Appendix 1 – Code of Ethics for Professional Accountants
Erin should notify Smart Worx of the postponement as it is consistent with ethical principles of integrity and professional competence. As Erin is complying with these codes of ethics, she has nothing to lose or suffer as she followed the guidelines of the code and therefore cannot be punished in any way.
Erin learnt that Smart Worx’s suppliers will postpone an order and the problem must be solved as the postponement of the order will jeopardise Smart Worx’s new product. Issue is whether Erin should notify the company of the postponement. Analysis of the Code of ethics has been conducted in regards to Erin’s situation and how she should act, and results showed that she should alert the company of the postponement.
Smart Worx Ltd noticed that sales have ceased to rise in the past 6 months and have actually declined in the past 2 months which resulted in cash shortages. Smart Worx’s accounting manager realised that payments to suppliers which are due to be made in 30 days may exceed 75 days. Smart Worx have recently placed a large order but the accounting manager is considering telling the supplier about Smart Worx’s cash problems which would further delay and jeopardise Smart Worx’s new product.
Out of the six main principles of the code of ethics for professional accountants, Erin’s responsibilities in this situation are linked with Integrity, Confidentiality, objectivity and professional competence and due care. Erin must be straightforward...
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