Question

In: Accounting

Susannah’s Sweets Pty Ltd has cash flow problems due to Covid -19 shutting cafes, so Zoe...

Susannah’s Sweets Pty Ltd has cash flow problems due to Covid -19 shutting cafes, so Zoe the Manager is applying to the bank for a loan. Elizabeth is the accountant at Susannah’s Sweets Pty Ltd. Elizabeth has discovered that some assets are overstated in this year’s Financial Statements, because Depreciation was not done. Elizabeth tells Zoe that the Financial Statements need to be corrected before they are submitted to the bank, as part of the loan application. Zoe replies that the bank would not approve the loan if the real financial position was known, so tells Elizabeth that she must not correct the Financial Statements. Zoe says that if Elizabeth tells anyone it will be her fault if the business closes and everyone loses their jobs. Required: Answer each question in the spaces provided below: a) Name 4 stakeholders in this situation? b) Explain two of the Ethical Principles affected in this case. State the principle and explain why you believe there are issues. c) Name two (2) potential Ethical Threats in the above case and provide your reasoning as to why you believe they are threats.

Solutions

Expert Solution

Solution :

Part A : Stakeholders

1) Bank

2) Employees

3) Owners and Representatives of the company - Manager

4) Customers

5) Government

Part B : Ethical Principles

1) Integrity : An accountant should be straightforward and honest in his approach to professional work.

Failure on part of Elizabeth to diclose the fraud of overstatement of assets is a direct violation of her integrity. It is the responsibility of an accountant to be honest to maintain the intergrity of the profession.

2) Objectivity : An accountant should not bias, conflict or undue influence of others to override her professional judgements.

In the given case, Zoe has influenced Elizabeth stating that she will be responsible for causing loss of employment to all the employees. Zoe has instigated an emphatic feel on Elizabeth to think in the shoes of employees. However, Elizabeth has failed to think that it is a trap by Zoe to influence her to conceal the fraud.

Part C : Ethical Threats

1) Intimidation Threat : Intimidation threat occurs when the accountant is intimidated i.e influenced by the pressure of the client.

In the given case, Zoe has intimidated Elizabeth by exerting influence and pressure on her to conceal the fraud. He influences her by stating Elizabeth would cause all the employees of the company to suffer.

2) Advocacy Threat : Advocacy threat occurs when the accountant client's interest undermines the accountant's objectivity.

In this case, Elizabeth is pressurized to think about the interest of the employees which will make her to sabotage the overall public interest


Related Solutions

Susannah’s Sweets Pty Ltd has cash flow problems due to Covid -19 shutting cafes, so Zoe...
Susannah’s Sweets Pty Ltd has cash flow problems due to Covid -19 shutting cafes, so Zoe the Manager is applying to the bank for a loan. Elizabeth is the accountant at Susannah’s Sweets Pty Ltd. Elizabeth has discovered that some assets are overstated in this year’s Financial Statements, because Depreciation was not done. Elizabeth tells Zoe that the Financial Statements need to be corrected before they are submitted to the bank, as part of the loan application. Zoe replies that...
Due to Covid-19, a business owned by Mr. Nathan is currently facing cash flow problems due...
Due to Covid-19, a business owned by Mr. Nathan is currently facing cash flow problems due to poor sales and the ongoing obligations to pay salaries. Furthermore, due to the extreme weather conditions, one of the business's warehouse was inundated with floodwater causing thousands of ringgit of losses to the inventory. As Nathan's insurance advisor, the student is required to advise on the risk management steps to mitigate the risk of ill health and accidents among the company's employees during...
Covid 19: One of the problems that arises with patients suffering from COVID 19 is due...
Covid 19: One of the problems that arises with patients suffering from COVID 19 is due to accumulation of fluid in their lungs. This makes it very difficult to breathe. You have walked into the emergency room and the interns are arguing about osmosis, diffusion and the symptoms of Covid. One of the interns is arguing that there is no link between the sysmptoms of Covid and osmosis and the other is saying yes there is. Since they know you...
How has Covid-19 impacted Zoom's staffing due to Covid-19 social distancing rules and so on?
How has Covid-19 impacted Zoom's staffing due to Covid-19 social distancing rules and so on?
Covid 19 is a crisis primarily caused by biology, but it has resulted in economies shutting...
Covid 19 is a crisis primarily caused by biology, but it has resulted in economies shutting down worldwide. The US government has already introduced a stimulus package close to $2 trillion, about one-tenth of total GDP and is working on another stimulus. The Federal Reserve has lowered interest rates and is more involved in private lending than ever before. The European Union, Japanese goernment, and others are spending hundreds of billions to keep the economy afloat. Do you believe a...
As a result of COVID-19 pandemic, company XYZ (Pty) Ltd is considering the introduction of the...
As a result of COVID-19 pandemic, company XYZ (Pty) Ltd is considering the introduction of the Fourth Industrial Revolution. They consider the industrial Internet of Things to be the way to go for the company. However, you are hired as a consultant to advise the CEO of XYZ wether 4.0 is the best option for the company. In your report after benchmarking, you need to also consider the challenges and benefits that can be derived by implementing 4.0.
Due to the COVID-19 epidemy, with so many working and studying remotely, the Internet’s capacity is...
Due to the COVID-19 epidemy, with so many working and studying remotely, the Internet’s capacity is under considerable strain. Unfortunately, this has put a huge load on Internet Service Providers (ISPs) and we can only expect the situation to worsen with time. Propose a fix/solution to the TCP/IP protocol suite to help the Internet overcome its capacity bottleneck/s. For example, you may focus on fixing a specific problem at a particular layer of the protocol stack or improving a known...
Honeymoon Haven Ltd is due to commence preparation of the Cash Flow Statement at the end...
Honeymoon Haven Ltd is due to commence preparation of the Cash Flow Statement at the end of 2010. The accountant has called in sick and the statement needs to be prepared by the end of the day. Consequently you, as managing director of the company are now required to complete this task, and have been given the following data: Summarised Balance Sheet as at 31 December 2010    2010 2009 Cash 106,800 168,210 Accounts Receivable 138,840 133,500 Inventory 213,600 202,920...
Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of...
Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of living? According to The New Geography of Jobs, Americans have historically been mobile, continually seeking new opportunities to improve their lives. The COVID-19 pandemic has caused people to remain indoors, and even some States have prevented unnecessary movement of people from one place to another. It is a huge change for many Americans who depend on constant mobility for their economic survival. As such,...
COVID -19 changed our lifestyles in so many different ways. Due to safety concerns, suddenly everyone...
COVID -19 changed our lifestyles in so many different ways. Due to safety concerns, suddenly everyone wants to wear face masks. However, as the suppliers fail to keep up with the demand, one option is to use homemade facemasks. According to the crafting experts, one adult mask requires two 9" x 6" pieces of tight-weave cotton and two 7" pieces of elastic. The elastic only sold in full yards. Write a program that reads the length (in yards) and width...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT