CPA Ethics and Governance Assessment
Ethical Hemp Ltd is a cloth manufacturing company incorporated by Esme Acacia and Saffron Banksia in 2005. The company has been operating successfully since then and has actually expanded its factories to Sydney and Bali and its shops across Australia. Saffron and Esme are the directors of the company who oversee the operations of the company with the help of other individuals such as Ben Banksia, Max Acacia, Tasma Callistemon, among others. Some of these individuals seem to be unethical in their decisions, an aspect that the company needs to look into in ensuring that the operations of the company do not crumble.
Ethical issues within a business organization are some of the most important issues that an organization needs to solve. At Ethics Hemp Ltd, there are a number of ethical issues that some of the individuals running the organization have failed to address. The issues of the organization are arising from the poor administrative framework within the operations of the organization, which have created loopholes that are likely to affect the organization adversely. This report identifies three ethical issues and the individuals involved in these issues. The report then analyzes one of the ethical issues identified using the APESB 110 code of ethics for professional Accountants and proposes a course of action for the party involved.
There are a number of ethical issues that have been observed based on the information provided. One of the issues identified is by Lawrence Helms. Lawrence Helms is an external auditor who is expected to work with the accounting team in being able to develop a prospectus for funds in expanding the retailing operations of the company. However, Andy is not available and Lawrence is working with Helen and Conrad. The ethical issue is based on the fact that Helen and Conrad do not have any experience in accounting practices, which makes them unfit to make any decisions in regard to the financial operations of the organization (Jackling 2007). Even though Andy is not available, it is unethical for them to make any decisions on their own without consulting Andy.
The other ethical issue within the company surrounds Tasma Callistemon and Max. Tasma was employed on a part-time basis as a community engagement officer. The company provided Tasma with a one hundred thousand dollars budget and given full responsibility for the money. She worked for three days in a week that her role at the company required (Gray, Owen & Adams 2006). In a meeting in November 2016, Max stated that he had heard rumors that some of the projects under Tasma had stopped and the funds allocated were being wasted. Max is keen on disciplining Tasma without conducting any investigations in regard to the rumors. Given that Max is basing his information on rumors, it is unethical to judge Tasma without proper investigations on her expenditure being made.
The other major ethical issue within the company is on Andy. Andy was employed as the internal accountant of the organization. Since this is the job that he was hired for, it is unethical for Andy to be absent during the presentation of the financial statements in January 2017. As the internal accountant of the organization, Andy is responsible for the preparation and presentation of the financial statements to the board. Even though he might be busy, it is unethical to leave the work to inexperienced individuals given how the financial department is important in presenting information about the financial performance of the organization (Rossouw 2010). As the internal accountant of the organization, it is important that he performs his role as the accountant even though he might have other duties assigned to him.
Fundamental principles in APESB 110 Code of Ethics for Professional Accountants
The APESB 110 Code of Ethics for Professional Accountants contains a number of principles for accountants that outline their ethical conduct during practice. The principles act as guidelines in ensuring that the accountants are ethical during their practices in their line of work. One of the major ethical issues at Ethical Hemp Ltd is about the practices by Andy. Andy was charged with the responsibility of being responsible for all the accounting operations within the company (Jamal & Bowie 2015). Andy, however, engaged himself in so many activities that he delegated his duties to his inexperienced subordinates who wrongly presented a financial performance of the company. One of the fundamental principles that have been breached by Andy is in the preparation and reporting of information. According to the Part C, section 320 of the APESB 110 Code of Ethics for Professional Accountants, a member is expected to present information that may be used externally or internally in an honest way and in accordance with the professional standards (APESB 2013). In light of this issue, Andy was responsible for the presentation of the financial information in regard to the operations of the organization. Andy did not, therefore, adhere to the professional standards in the presentation of the financial performance of the organization, which led to the presentation of misleading financial information.
The other major principle in the APESB 110 Code of Ethics for Professional Accountants that guides Andy`s behavior is Acting in the public interest as outlined in Part A on the general application of the code. According to this part, professional accountants should accept that they should act in the interest of the public (APESB 2013). The standard outlines that the actions and decisions by a professional accountant should be towards the public interest and should not be confined to personal or employer`s interest. Andy failed to honor this standard by putting the interests of the company forward. Andy did not understand that he was a professional accountant in practice and that his decisions and actions would be toward the interest of the public (Mintz & Morris 2008). By leaving his major role in the company to the inexperienced subordinates, he had put the interests of his employer first, which is not provided for in the standards provided by the APESB 110 Code of Ethics for Professional Accountants.
Course of Action
Andy was employed by the company as the internal accountant. Andy established a solid reputation within the company, which led to the expansion of his roles. Andy was tasked with other activities such as recruitment and marketing that were not in his job description initially. On realizing that he could not effectively handle his role as an internal accountant, he sought the consent of the board to employ two junior accountants who overtook the daily accounting operations within the company. One major issue with Andy by hiring the two junior accountants was that even after employing the two junior accountants; he still had his title as the internal accountant of the company. This meant that he was their supervisor and one who would ensure that accounting operations were operating effectively. Given how busy Andy was, it was difficult for him to realize that Conrad did not have any experience in accounting and that Hellen had only worked for two years. This was quite unethical for Andy, given his position in the company as the internal accountant (Arens et al 2007). Since the board has already approved his consent to hire junior accountants, he should have hired highly experienced individuals who understood how to work in the accounting department and who could run the department even in his absence and with minimal supervision.
Andy was hired as an accountant. After establishing a rapport with the management, he started engaging in other activities beyond his department such as marketing and recruitment. Upon realization that his roles within the organization were overwhelming, Andy should have talked to the board about employing other capable employees would oversee the activities in marketing, hiring, and other activities that he was committed to. His major role within the company was to become an accountant and regardless of how overwhelming other activities, he had to act in accordance with the principles that have been laid in the APESB 110 Code of Ethics for Professional Accountants. The course of action that Andy would have taken is to either maintain the position of a professional accountant or disregard the other roles or to drop his role as an accountant and give the chance to another experienced accountant. By engaging in other activities, it was difficult to oversee the accounting operations of his department, which implied that he was acting in the best interest of his employer other than acting in the best interest of the public (Ramaswamy 2005). The organization seems to be disorganized and the board should consider aligning its operations across all departments in attaining its goals and objectives.
Course of Action and the code of ethics
The APESB 110 Code of Ethics for Professional Accountants outlines a number of principles that are in line with the course of action proposed. The course of action for Andy should be that he maintains his role as the internal accountant or drops his role as an accountant for the company in order to engage in other activities in the company (Rezaee 2009). The course of action of action is based on the idea that Andy cannot work both as an internal accountant and also work in other departments. An accountant is usually different from other employees within the organization since he is responsible for the provision of financial information, which is not only important for the organization but also important for the public. According to Part A on the general application of the code, a professional accountant is responsible for ensuring that they act in line with the public interests but not on their personal or employer`s interest (APESB 2013). By Andy working in other departments, it means that he his actions are guided by the needs of his employer. Therefore, the course of action is guided by the principles that have been outlined in the APESB 110 Code of Ethics for Professional Accountants.
The course of action has also been guided by APESB 110 Code of Ethics for Professional Accountants. According to Part C, Section 320 of the APESB 110 Code of Ethics for Professional Accountants, a member is expected to present information that may be used externally or internally in an honest way and in accordance with the professional standards (APESB 2013). Hellen and Conrad provided financial information that was inconsistent and unreliable. This meant that they did not follow the professional standards that were required during the presentation (Jenkins et al 2008). However, this was due to Andy, who was too busy to know how his department was fairing on. Even though Andy might have been busy, he should have spared time during the presentation of the financial information to the board, which is one of his major responsibilities of being in the company. Being present during the presentation of financial information is a professional standard that confirms to the board that the information that has been presented is reliable.
Summary and conclusion
In summary, there are a number of ethical issues that have been noted from the information provided on Ethical Hemp Ltd. One of the major issues that have been noted is on Andy, the internal accountant in the company. Andy has been busy working in other departments to a point that he does not monitor the activities in his department. The employees that he has hired are inexperienced and provided inconsistent and unreliable financial information to the board. These actions are against the APESB 110 Code of Ethics for Professional Accountants and Andy needs to implement a new course of action. The course of action that has been proposed is for him to concentrate on the accounting department and ensure that each practice within the department is in line with the professional standards that have been set. This course of action aligns with the principle that a professional accountant should for the best of the public but not for his company. Such organization will ensure that the operations are in line with its goals and objectives.Order Unique Answer Now