Accounting

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Question 1 – Case Study

1. Determine the facts:

In the given case we can summarize the following facts,

• CCCL owns two old linear accelerators used in radiation therapy, Radiographers using these linear accelerators have raised concerns that they have adverse radiation impacts on patients. CEO of CCCL, Adam Chase approached Belinda Battersby (the audit partner responsible for financial report audit) , to provide an opinion that the linear accelerators are fit for use.
• Adam pointed out that CCCL audit is up for tender the following year and suggested that Battersby & Associates might like to take on the linear accelerators engagement without charging the fees as a gesture of goodwill.  

2. Define the ethical issues

Stakeholders include:

Belinda Battersby

Radiographers

Patients

The potential client

The competitor firms

Ethical issues

Adam has requested Belinda to provide an opinion that the linear accelerators are fit for use and he give the hint of the issue of tender and asking for favor of engagement for free. The major ethical issue arises for Belinda being an Auditor that whether she should give the misleading statement in Audit report and get the tender for following year or she should refuse to give the misleading statement about the accelerators and maintain her integrity and objectivity while auditing a financial report.

3. Identify the major principle, rules and values

In reference to APES 110, Section 100 to 150 (Gay & Simnett, 2010),

• Integrity – An auditor has to be straight forward and honest in all professional and business relationship and should give fair and truthful dealings and fair statements without any omissions and false statements.
• Objectivity – An auditor not to permit bias, conflict of interest or undue impact of others to override professional judgments.
• Professional behavior – to keep up proficient information and ability at the level required to guarantee that a client gets Professional Services as per professional standards.

In reference to Section 331 (Gay & Simnett, 2010)

• Auditor is entitled to receive reasonable fees and expenses for the work needed to be done. This provision lets the auditor to create an environment for and audit process which is free from undue influence and obstruction. This provision let the auditor in resisting management pressure.

4. Specify the alternatives

• Work for free
• Do not work for free and give a correct and fair audit for financial report
• Talk to Adam and clarify that she cannot work for free

5. Compare values and alternatives and assessing consequences

• Work for free

• If she works for free then, it is the violation of APES Section 240, because according to it there should be reasonable fees.
• The misstated audit report can create a trouble for her in future.
• Radiographers might question about the false statement in the report
• Patients will continue to suffer the adverse effects of the old linear accelerators
• She will get the tender of CCCL audit next year

• Do not work for free and give a correct and fair audit for financial report

• As per code of ethics APES 110, S 100, she should follow the principles of integrity, objectivity and thus enhancing her professional reputation.
• The integrity of Belinda will be intact
• Patients will not suffer with the adverse effects of old linear accelerators
• Radiographers will appraise her professional judgment and objectivity
• Battersby and Associates might lose the tender for next year
• As per S 331, she can ask for reasonable fees for the work

• Talk to Adam and clarify that she cannot work for free

• Adam would revise the proposal and might apologize for using old linear accelerators.
• Belinda will lose the tender for next year.

6. Make your Decision

We may conclude that, Belinda should not work for free and give a correct and fair audit for financial report.

Question 2 – Business Report

Introduction

(Gay & Simnett, 2010) Corporate governance is a system by which the companies get directed and managed and also covers the Board of Directors and relationship between the board of directors, management body and shareholders. The Board of directors whereas, include the CEO, CFO and a large portion of independent directors. It is important to note the different role played by different people in corporate governance. The board of directors is accountable to shareholders for making the overall business policies which runs the business activities such as safeguarding the rights of shareholders, fixing officer’s salaries, dividends, authorizing borrowings, making internal controls and calculating and assessing business risks. They also look after approving the financial reports. Therefore the directors need to be independent.

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