SESSION 8

[Marvellous]

1. Using the American Accounting Association model and the Tucker's Five question model, what is the ethical decision you would make in the following scenario.

2. Explain the above mentioned methods used.


SCENARIO ONE
The senior auditor uncovers an irregular cash payment which was pre-audited by an auditor and authorised by the human director made to an employee that did not have the capacity to pay back the loan.
The senior auditor suspected that the auditor was given a bribe but he can't prove it.
The human director offers a salary increase if she pretends not to have noticed the payment.
The senior auditor has been wanting a promotion for a long time and the salry increase will alleviate some of the problems that she is currently facing.
Should the auditor take the money?

SCENARIO TWO

1. Let us read the case study of question 1 in the June 2008 PA and try to aplly the AAA model or the Tuckers 5 question model.


Ok people I have one last session on Friday and then I think we will be through with Ethics
:smile:

[Vivienne]

Hi All,
marvellous you are right am sure we would have exausted extensively on the ethis after you post the friday one.we said the next set of questions should be on Risk management.as we dont have a lot of active participants here.so Danial could you go aheard and post some questions on Tuesday next week on this topic.please post a reply to tell us that you will go aheard.

[Marvellous]

1. Using the American Accounting Association model and the Tucker's Five question model, what is the ethical decision you would make in the following scenario.

2. Explain the above mentioned methods used.


SCENARIO ONE
The senior auditor uncovers an irregular cash payment which was pre-audited by an auditor and authorised by the human director made to an employee that did not have the capacity to pay back the loan.
The senior auditor suspected that the auditor was given a bribe but he can't prove it.
The human director offers a salary increase if she pretends not to have noticed the payment.
The senior auditor has been wanting a promotion for a long time and the salry increase will alleviate some of the problems that she is currently facing.
Should the auditor take the money?

The American Accounting Association model is used to solve individual ethical dilemmas.

There are seven questions that should be asked before you reach a decision.

Mnemonic FEN ABCD

F - Facts
E - Ethical issues
N - Norms, principles, values
A - Alternative courses
B - Best course
C - Consequences
D - Decision

In reference to the scenario
1. What are the facts of the case?
Senior Internal Auditor discovered irregular cash payment pre-audited by Internal Auditor.
Senior Internal Auditor offered salary increase by human director who authorised documents (Bribe?)

2.What are the ethical issues in the case?
Whether or not the senior internal auditor should accept the salary increase.
Accepting it would make the SIA act illegally and be negligent of her duties

3.What are the norms, principles & values related to the case?
Integrity - be straightforward and honest in all business & professional relationships. The IA and the human director did not display it.
Objectivity - not allow bias,conflicts and undue influence. The human director and the IA will not be objective because they have allowed the client to have undue influence
Professional competence and due care - maintain professional knowledge and skill

4. What are the alternative course of action?
Accept and ignore the irregular payment
Refuse and take appropriate action

5.What is the best course of action consistent with the norms, principles and values?
Refuse salary increase
Report the payment to the relevant authorities
Report the conduct of the human director and the IA

6.What rae the consequences of each course of action
Times are hard and it would be bad for SIA to accept so that she can enjoy the increase in wealth which shall also increase her standard of living.
However, there is a risk if the act is discovered bot professionally and legally. The SIA conscience will not be at peace knowing that she can be exposed at any time.

Refuse resulting in unfortunate consequences for the human director and the IA.
By refusing she will enhance the reputation of auditors and uphold the intersts of the shareholders

7.What is the decision?
SIA should refuse the salary increment


Tucker's 5 question model can not be used in this scenario because it is mostly used in corporate ethical dilemma



SCENARIO TWO

1. Let us read the case study of question 1 in the June 2008 PA and try to aplly the AAA model or the Tuckers 5 question model.


Ok people I have one last session on Friday and then I think we will be through with Ethics