In: Accounting
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.
Answer:
a) The following are the stakeholders in this situation:
b)
Ethical Principles :
Integrity : An accountant ought to be direct and honest in his way to deal with proficient work.
Disappointment on part of Elizabeth to diclose the misrepresentation of exaggeration of assets is an immediate violation of her respectability. It is the duty of an accountant to be straightforward to keep up the intergrity of the profession.
Objectivity : A bookkeeper or an accountant ought not predisposition, conflict or undue impact of others to supersede her expert decisions.
In the given situation, Zoe has affected Elizabeth expressing that she will be liable for making loss of work all the representatives. Zoe has affected an emphatic feel on Elizabeth to think in the shoes of workers. In any case, Elizabeth has neglected to imagine that it is a trap by Zoe to impact her to disguise the extortion/fraud.
C)
Ethical Threats :
Intimidation Threat : Intimidation threat happens when the bookkeeper /accountant is threatened i.e impacted by the weight of the customer.
In the given situation, Zoe has threatened Elizabeth by applying impact and pressure on her to disguise the extortion. He impacts her by expressing Elizabeth would make all the workers of the organization endure.
Advocacy Threat : Advocacy threat happens when the bookkeeper customer's interest subverts the accountant's objectivity.
For this situation, Elizabeth is pressurized to consider the interest of the workers which will make her to disrupt the general public interest.