Question

Question: Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the past six months, Harriet has noticed that a lot of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World to benefit from this expected increase. 

Required 

What are Harriet’s ethical responsibilities, if any, concerning the information she has learned through her duties as an accountant for New World Pharmaceuticals? What are the implications of her planned purchase of New World shares?

 

Answer 1

Step 1: Definition of accountant

An accountant is a person who maintains the books of account in the organization and is also accountable for his performance. The accountant is personally liable for the error in the books of the company.

Step 2: Explanation

In this case, their ethical responsibility of Harriet is not to disclose any information to the public before it is available publicly. If Herriot did this then this is known as illegal because this type of activity is known as insider trading where someone leaks important information about the company that is not available publicly. In this, their main duty of Harriet is to maintain her responsibility toward the company and not purchase the share of the company. Also, she should transfer any information outside the company.

 

Answer:

In this Harriet, responsibility is to not do any type of insider trading by using information that is not available publicly.