a. Explain two (2) possible reasons why facilitating payments or bribes should not be practiced by organizations. (5 marks)

b. Discuss two (2) importance to implement the employee-and-employer-interest model in Sukaria Sdn Bhd. (5 marks)

TOPIC : BUSINESS ETHICS AND CORPORATE GOVERNANCE

QUESTION 2 Sukaria Sdn Bhd is a business selling Jati furniture. Suriya has been hired as an accountant for the company in December 2021 to fulfil the immediate vacancy of the post. While busy preparing for the year end audit, she discovered irregularities and lapses in the company's management and operations. Some of the issues with regards to the accounting treatment include: i. Entertainment bills that belong to the directors' family have been deducted as company's expenses. ii. All withdrawals from the company only require an authorization from the Finance Manager regardless of the amount. ili. Few transactions involving sales of high-priced furniture has been recorded separately and are not captured in the company's accounting system. The proceeds from these sales are used to fund the firm's annual dinner event. iv. There were transactions involving shipping charges been recorded without proper supporting documents which she believed related to the facilitating payments involved in transporting the imported Jati furniture from Country A. Many regular customers with huge amounts of purchases are unable to settle their payments when they fall due, but no provisions have been provided for the debts. Suriya arranged a meeting to discuss with the directors regarding her findings. At the meeting, it was obvious that the directors knew about the issues, but they refused to make any adjustments because that would affect the company's reported profit. Suriya raised the issue on the risk associated with qualified opinion by the external auditor, but the directors told her not to worry as they already have a good long-term relationship with their auditors, and they know how to keep the external auditor mouth shut. Required: V