Heading 1 Heading2 Title Subtitle Subtle Em. Font Paragraph Styles Ethics1 15 An

Question

Heading 1 Heading2 Title Subtitle Subtle Em. Font Paragraph Styles Ethics1 15 Anna, Gino's-internal accountant,-is re gone-very-well, with significant growth-but Anna is worried-as-the-budgets-that-she-prepared acouple of months ago·show-that-thereisal arge-decrease-of-workin-the-pipeline-and-that-the-2016/2017-year-is. likely to-be-bad-with potential-redundancies. Both-Anna-and-Gino-had-several-meetings in-the last month to try and put-in-some contingency plans. These plans involved getting an increased-overdraft from-the bank to help cover the expected reduction in cashflow. Gino-has also-been-negotiating with another large property developer tosecure a-deal-to-build-over 1000-homes-fora-new-development-that- they are-doing."The-deal is close-to-being-sealed-butis at-least partly dependant on-Gino-proving-thathe has the-financial-muscle-to-handle-this-many homes, and-the-working-capital-tohandlethe growth." The proposed additional-bank funding is to-be a ke commence-from- and-both Anna -and-Gino-are-awarethat this-year's position-in-the-2016/2017 year...f ing the draft accounts to-30-June in-July 2016.The yearhas y component of this.if he gets it, revenue would- this around-June 2017. The-bank normally-conducts an annual-review ofthe acec s review is particularly important-given-theirbudgeted A draft set of accounts for the year ended-30th June 2016-is shown below1

Explanation / Answer

According to the APES 110 Code of Ethics for Professional Accountants, the fundamental principles of Professional Accountants are;

Accordingly, the key principle to be followed by the Accountant Anna in this case, is to prepare the financial information objectively.

Objectivity is defined as “to not allow bias, conflict of interest or undue influence of others to override professional or business judgments.

Now we discuss about the threats.

Paragraph 100.12 states that threats may be created by a broad range of relationships and circumstances. When a relationship or circumstance creates a threat, such a threat could compromise a Member’s compliance with the fundamental principles.

Part C of the APES code deal with members in Business.

The relevant threat faced by Anna in this case is “Intimidation threat”. It is the threat that a Member will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the Member. Here Anna is pressurized by Gino to manipulate the accounting information, which is a threat being faced by Anna to objectively present the financial statement information.

What Anna should do:

Applying the AAA model for decision making, follow the steps as below;

Step1: Establish the facts of the case. (What is required to be achieved by influencing the builder.)

Step 2: Identifying the ethical issue: Securing the contract by unfair means by providing access to personal car.

Step 3: Identification of norms, principles and values related to the case:

                Consider the norms for applying for the building contract. The norms would prohibit giving any personal inducement to anyone for securing the contract.

Step 4: Identify the alternative course of action. (if any other course of action available, as per established norms).

Step 5: If norms as per step 3 overrides the alternative as per step 4?

Step 6: Consider the consequences of the outcome

Step 7: take the decision.

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