East & West is a small accounting firm with two partners. The partnership employs three senior accountants

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Question:

East & West is a small accounting firm with two partners. The partnership employs three senior accountants and ten junior / graduate accountants who are supervised by the senior accountants. Murray is a junior accountant employed by East & West. He is supervised by Adele, who is a senior accountant. Murray prepared a capital budgeting analysis for a client of East & West and sent it to Adele to check. Adele did not bother to check the work because she was busy and she knew that Murray was very good at his job. Adele sent Murray's analysis to the client. The next day, Murray realised that he had made a mistake in the capital budgeting analysis. After correcting his error, the analysis indicated that the investment was actually viable for the client, even though his original analysis indicated that it was not a viable investment. Murray immediately informed Adele, who is now wondering what to do. Ideas flashed through her mind, "the client might think East & West are incompetent, but would they ever know? Murray might be blamed for the mistake; oh , if only I had checked it!

Required

Please label your response to each part.

i) Define the ethical problem faced by Adele. (2 marks)

ii) Identify two individuals or groups who are key stakeholders and their rights or the duties owed to them by Adele. (3 marks) Ethical review: Identify two ethical principles that are relevant to the ethical problem faced by Adele and explain why they are relevant.

Describe two different courses of action that Adele could take in response to being informed by Murray of his mistake. (2 marks) Investigate the ethical outcomes: For each option described in part 3) describe the ethical outcomes with reference to the principles that you identified in part 2) as being most relevant, and how it may affect the stakeholders identified in part 1) ii). (8 marks) Decide. Make a recommendation to Adele that is consistent with your investigation of the ethical outcomes.