Breanna is a purchase clerk in the Purchasing Department at Independent Dairy Farms (IDF), one of the

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Question:

Breanna is a purchase clerk in the Purchasing Department at Independent Dairy Farms (IDF), one of the leading providers of dairy products for New Zealand's domestic and international markets. She is responsible for buying the milk from the farmers (vendors) throughout the country.

She is also a friend of Marina who was promoted from assistant accountant to accountant at IDF after qualifying as a chartered accountant last year. Recently Breanna approached Marina about a deal she believes will benefit them both.

She asks Marina to set up a new vendor in the Vendor Master data, bypassing the normal vendor selection process. However, Marina knows that this vendor was previously rejected as an approved vendor because their milk was not up to IDF's quality standard.

Breanna will receive a kickback that is worth 10% of the invoice value for every purchase order IDF gives to this vendor and offers Marina 50% of the money she receives. Marina is trying to save money to buy her first house and knows that the extra money will help her substantially to reach her savings goal. However, she wonders whether accepting Breanna's proposal would violate the IFAC Code of Ethics.

At the same time, IDF is under pressure to make more profit because of increased competition, and Daisy, one of the company's senior managers, suggests they pressure farmers to drop their prices. However, another senior manager, Ana, warns that reducing prices will likely lead to farmers selling sub-standard products, as well as pushing farmers to engage in cost-cutting practices that could result in job losses and increased environmental pollution.

Marina has been asked by Lee, IDF's CEO, to advise her on whether Daisy's suggestion of pressuring farmers to reduce their prices is a good idea.

Address the issue of Breanna's proposal to Marina using the IFAC ethical decision-making model by answering the following questions:

1) State which fundamental principles are under threat in this scenario?

2) Identify THREE plausible courses of action that Marina could take in response to Breanna's offer of 50% of her kickback if she adds the new vendor.

3) State which one of your three suggested courses of action would be the MOST consistent with the IFAC Code of Ethics? Give reasons for your answer.