SECTION B $($ETHICS$)$

Read the case below and answer all the questions that follow it$.$

Due to the economic downturn, Owusu and Anima were laid off by a local larger audit firm. They established a new audit firm and were able to attract a few clients in the first year. They also hired Akosua and Adom, who had been laid off by the same firm. Akosua had been a manager for the past three years. She has been told that she can make partner if she can quickly attract new clients. Adom was a staff accountant for three years and was promoted to In$-$Charge Accountant this past year.

A prospective client in the construction industry contacted Akosua to bid on the company's audit work. The client was upset over the audit fees charged by its present auditors. They were unhappy with the present auditors' tax work and their delay in delivering a proposal on a new computerized accounting system. Akosua sees this situation as a perfect chance not only to secure a new audit client for the firm, but also to receive credit for bringing in more tax and consulting revenue.

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Akosua asks Adom to prepare a draft of the bid which will be submitted to the prospective client.

Adom develops the bid based on a similar client in the same industry and his assessment of the risk associated with a new client. Akosua is concerned that the bid is too high. Akosua suggests that they may be able to hire interns from a local college accounting program to use on the audit. Adom is concerned about using inexperienced staff on the audit of a new client. He also read in a recent Audit Risk Alert published in the ICAG magazine that auditors should be alert to cash flow problems for clients in the construction industry. Adom argues that the risk of loss could be higher than normal if they do not perform a quality audit.

Akosua tells Adom not to worry or say anything to Owusu about his concerns with the bid. She will handle any problems that come along, either with Owusu or the client. Akosua argues that Owusu will not complain about the lower audit fee because of the potential for the new tax and consulting work. By using lower$-$paid staff members and eating a little time, they could even come in at budget. Akosua also points out to Adom that once she makes partner, there will be a position open for him at the manager level. Akosua tells Adom to finish up the proposal based on her suggestions, since she needs to work on a bid for another prospective client.

Questions

a$)$ Identify the key ethical principles as espoused by IFAC for professional accountants in the case and provide evidence.

$(2\mathrm{.}5$ Marks$)$

b$)$ Who Are the Primary Stakeholders of the case $($how evidence$)?(2$ Marks$)$

c$)$ What Are the Relevant Facts in the case? $(2\mathrm{.}5$ Marks$)?$

d$)$ What are the possible courses of action? $(5$ Marks$)$

c$)$ What Actions Should Be Taken? $(3$ Marks$)$