PART 1: (20 Marks)

Read the case below then answer the following questions.

You are one of three partners in an accounting company. Your company offers audit services to small or medium sized organizations. You have been proud that your auditing company is operating at high standards and adopting an excellent well written code of conduct, your company is also following the international standards of professional accountants. Therefore, in few years, your auditing company built a very good reputation of trust by clients and professional practice. Recently, your company was appointed as an external accountants/auditor to a young, successful, and fast-growing trading company XXX. XXX company started trading business with a handful of employees but now has a workforce of 200. Your job is to assist the company in their preparation of the end year financial statement and tax report. Due to your close relationship with the directors of the company (who are its owners) and several of its staff, you become aware that staff are doing some sales transactions with the approval of their manager, without recording the income of these sales in the companys accounting system. The income from these transactions is then used to fund the firms social activities such as Christmas party.

You know the owner of XXX company for long time, and you have established a good trusting relationship with him over the years. You know also that as per your job, you must ensure that the financial statement that you produce on behalf of your client is in accordance with government regulation and professional standards. You decided to meet with you partners to discuss the issue, who agreed that it is important to act in order to protect your reputation as a professional accountant, and that of your firm and your profession. One of them however, raised a concern about the effect of the action on stakeholders and about the possibility of losing the client.

1. Explain the dilemma in the above case. Also state who is in the dilemma? (5 Marks)

2. Indicate and explain the type of conflict creating the dilemma, indicate only one type of the four types of conflicts studied, and explain why you think it is the one most suitable in the above case (2 Marks)

3. Identify three stakeholders that could be affected by your action and the actions of XXX. (3 Marks)

4. Would you say your firm is applying any CSR? Explain your answer by specifying which approach of CSR your company is applying. Explain why you think so. (5 Marks)

5. How would you solve the dilemma, applying first the golden rule, the rule of greater good? (5 Marks)

• Golden rule

• Greater Good