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Ethics and Governance in the Actions of Sunshine Limited

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Added on  2020-05-28

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Following are the major ethical and governance related issues related with Sunshine Ltd: Lack of Integrity and Transparency: It is the authority of the shareholders of the companies to get information about the profitability of their investments in the company. In order to provide satisfaction to the shareholders, the general manager of Sunshine Ltd has taken the way to change the method of depreciation in order to create illusion to reduce the level of profit.

Ethics and Governance in the Actions of Sunshine Limited

   Added on 2020-05-28

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Running head: FINANCIAL ACCOUNTINGFinancial AccountingName of the StudentName of the UniversityAuthor’s Note
Ethics and Governance in the Actions of Sunshine Limited_1
1FINANCIAL ACCOUNTINGExecutive SummaryThe main aim of this report is to analyze and evaluate various aspect of ethics and governance inthe actions of Sunshine Limited. The first part of the report shows the analysis of major ethicaland governance issues in the company. The second part comprises the role of the accountant incharging deprecation. The third part of the report shows the description of major stakeholders ofthe company. The last part of the report analyzes various aspect of AASB116 for changingdeprecation.
Ethics and Governance in the Actions of Sunshine Limited_2
2FINANCIAL ACCOUNTINGIntroductionThe provided information is on the company named Sunshine Ltd and the generalmanager of the company Kam Sunshine went to the accountant, Maria Mars for reduction inprofit. The major motive of Kam is to do some modification in the upcoming profit of thecompany. This aspect has created an ethical dilemma on Maria Mars due to her concern for therenewal of her contract with the company1. This has led to Maria to change the method ofdepreciation from straight-line method to sum-of-year-digit method in spite of knowing theunethical nature of this action. In this particular case, the major stakeholders are shareholders ofthe company, local community, government, employees, customers, suppliers, accountant,general manager and creditors. With the action of Maria, she has breached three major ethicalprinciples; they are Integrity, Transparency and Violation of Objectivity. Ethics and GovernanceEthics and Governance is highly related with morality and they are not compelled toanyone. In the presence of ethics and governance, the confidence of the stakeholders uses toincrease on the quality of the work of the company. Following are the major ethical andgovernance related issues related with Sunshine Ltd:Lack of Integrity and Transparency: It is the authority of the shareholders of the companies toget information about the profitability of their investments in the company. According to thechange in the profitability of their investments in the company, they use to take decisionswhether they will keep the shares of the company or not. In order to provide satisfaction to theshareholders, the general manager of Sunshine Ltd has taken the way to change the method ofdepreciation in order to create illusion to reduce the level of profit. It shows the lack of integrityand transparency from the side of Sunshine Ltd for the depiction of accurate financialinformation to the users of financial statements2.Breach of Objectivity: It can be observed that the general manager of Sunshine Ltd has used themanagement of the company in order to be personally benefitted and the accountant of SunshineLtd, Maria Mars has assisted him to achieve it. The use of different method of depreciation canbe seen in Sunshine Ltd I order to devalue the assets so that the company can become beneficialfrom future benefits. Variance in the timing of depreciation can be seen as Maria has changed themethod of depreciation. It is the responsibility of the accountants to disclose accountinginformation in the most truthful way to the stakeholders. For this reason, the work of Maria hasviolated the principles of objectivity of accounting ethics and governance3.1Lo, Bernard.Resolving ethical dilemmas: a guide for clinicians. Lippincott Williams &Wilkins, 2012.2Carey, Peter John, Gary S. Monroe, and Greg Shailer. "Review of Post‐CLERP 9 AustralianAuditor Independence Research."Australian Accounting Review24.4 (2014): 370-380.3Han Fan, Ying, Gordon Woodbine, and Wei Cheng. "A study of Australian and Chineseaccountants’ attitudes towards independence issues and the impact on ethical judgements."AsianReview of Accounting21.3 (2013): 205-222.
Ethics and Governance in the Actions of Sunshine Limited_3

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