Ethics in Accounting Education

The assignment delves into the multifaceted topic of incorporating ethics into accounting education. It examines various scholarly articles that discuss different approaches to teaching accounting ethics, including the use of case studies, simulations, and discussions. The document also explores the challenges faced by educators in effectively integrating ethical considerations into the curriculum and highlights the importance of developing ethical awareness among future accountants.

Running head: AUDITING THEORY AND PRACTICE
AUDITING THEORY AND PRACTICE
Name of the Student
Name of the University
Author’s Note

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Executive Summary
The main aim of the study is to address the various types of the legal and ethical issues, which
should be considered by the Miller Yates Howarth (MYH) audit division. The main
consideration of the study has been based on the application of “American Accounting
Association (AAA)”, with the ethical decision for explaining the ethical concerns in the given
study. The last part of the study has been related with the appropriate case law with the
appropriate recommendations for the managing partners of MYH. The various types of the
comparison of the values has been further seen to be considered with the application of “APES
110 Code of Ethics for Professional Accountants”, the main application of the sections with
this rules has been identified with “Section 310 conflicts of interest” vs. “AASB 102 on
valuation of inventories”. The considerations which the company needs to take for the third
party has shown the declaration of the financial is not true, auditor has been seen to recklessly
ignore the facts is seen to not true, various error has been seen to be committed during the
preparation of the final accounts, the various types of the negligence is seen to be based on the
part of the employer of the auditor and the preparation of the financial statement is done
intentionally so the third party may be able to take appropriate action.

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Table of Contents
Introduction......................................................................................................................................3
Answer to Question1.......................................................................................................................3
Answer to Question 2......................................................................................................................6
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10

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Introduction
AAA was founded in 1916 is based on reputable and rich history for holding premier
community for the academic accountants. It has been seen that the diversity in the membership
has been able to create environment by incorporating innovation.
The main intention of the report has addressed the various types of the legal and ethical
issues, which should be considered by the Miller Yates Howarth (MYH) audit division. The
main consideration of the study has been based on the application of “American Accounting
Association (AAA)”, with the ethical decision for explaining the ethical concerns in the given
study. The last part of the study has been related with the appropriate case law with the
appropriate recommendations for the managing partners of MYH.
Answer to Question1
AAA Model
Determination of Facts
As per the given fact MYH accounting firm operates in NSW and Queensland. Morgan
Fertilizers Pty has been is considered with the long standing client of the company with the
operations in Tamworth and Toowoomba. It has been further observed that Morgan Fertilizers
has been recently able to change its contractor for the waste management to Dumparound Ltd.
Jacqui leak has been further regarded as the senior auditor with the knowledge about the
community activities and she is aware of the local council investigating of the Dumparound Ltd.,
for the concern of toxic waste in one of the sites (Davidson & Stevens, 2013).

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Identification of ethical issues
The main consideration of the ethical issue has been further able to relate to Morgan
Fertiliser for the change of the contractor to Dumparound Ltd., to do the evaluation of waste
management. The important ethical consideration has been further raised the concern for the
investigation of the Dumparound Ltd. based on the evel of toxic waste at one of its sites. The
contract is seen to be based on the specification of the damages and it has not been signed by
Dumparound. The contract is seen to be held substantially for 3 years and Jacqui particularly
concerned about the implications (C. Graham, 2013).
Identification of major principals and rules, values
Apart from the various types of the prevailing ethical issues the main form of the legal
issues has been seen to be based on the “AASB 102 valuation of inventories”. The valuation
cost of the inventories has been recognized with the asset and the same needs to be carried
forward for the revenue detection. The main form of the applicable code for the study is based on
“APES 110 Code of Ethics for Professional Accountants”. The main applicable section under
this has been further seen to be applicable as per the members of MYH, who are expected to
support the legitimate and the ethical goals and relevant procedure in the organization (Kermis &
Kermis, 2013).
Specification of the alternatives
The important specification of the alternatives has been based on evaluation of inventory
adjustment with the inventories between the dates of physical count and end dates. The physical

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count should be recorded appropriately. Furthermore, the auditor is required to analyze the
inward and outward movement in the stock as per the date of cut off. This date is further seen to
be established as per the closing date of year (Roberts, 2014).
Comparison of values and alternatives
The various types of the comparison of the values has been further seen to be considered
with the application of “APES 110 Code of Ethics for Professional Accountants”, the main
application of the sections with this rules has been identified with “Section 310 conflicts of
interest” vs. “AASB 102 on valuation of inventories”. As per the APES ruling for the
responsibility of the members it has been seen that the employing organization for this needs to
comply with the fundamental principles which needs to comply with the fundamental principles
of conflict. It is further seen to be regarded as providing the needs of the business as per the
support of the employer and the rules and the procedures with the organization with the
appropriate business concern (Shawver & Miller, 2017).
The main consideration of the rulings of AASB 102 is seen to be measured with the net
realizable value or cost of an asset which needs to be considered with the evaluation off the
relevant factors which involved in making the assets ready for use (Boyce, 2014).
Identification of the alternatives access the consequences
If inventory is overvalued, the net income should be overstated with relevance to the
gross profit of the company. The overvaluation of the retained earnings needs to be considered as
per the retained earnings. The equity value, total assets and the current assets needs to be
overvalued in terms of the retained earnings (Cameron & O’Leary, 2015).

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Recommended Decision
The important from of the recommendation for Oasis Ltd. has been seen in bringing
forward the relevant issues which is negligence charged in terms of the audit of MYH. Despite of
this fact, the sole decision needs to be considered with the court decision which needs to deal
with the case of where MYH may or may not be held responsible for the negligence (Tormo-
Carbó, Seguí-Mas, & Oltra, 2016).
Answer to Question 2
Report for the managing partners of MYH
Based on the specific considerations of “AASB 102 on valuation of inventories”, the
main complication with the errors pertaining to the valuation of inventories at the asset cost and
the value carried forward with the recognition of the revenue. The measurement of the inventory
needs to be further considered as per the realizable cost or value, which is lower. The inventory
cost needs to be evaluated with the realizable cost or value, which is lower. The cost of the
inventories needs to be considered as per the conversion cost, purchase and the cost which is
seen to be incurred with making the asset ready for a specified purpose. It is further noted that
the inventory cost may not be recoverable in case the portion of the inventory is obsolete or
damaged. The inventory cost is not seen to be expected to be recovered in case it is as per the
expenses of the completion or is seen to be assessed as per the sales policy which has been
expanded. The important consideration for the recording is done for the inventories below the
cost to the net realizable amount which is considered as per the reliable nature of the inventory.
This should not be carried with the excess amount of the realization from the sales (Tweedie et
al., 2013).

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In case the inventory has been overvalue, the net income and the amount of the gross
profit, which needs to be overstated. The important impact of this may also lead to the total
assets, retained earnings and equity of stockholder. The net income has been considered to be
overvalued in terms of the inventory with a fewer number of the cost of the goods sold charged
in terms of the revenue. The increased amount of the net profit needs to indicate the equity of the
stakeholders and the retained earnings. The overvaluation of the inventory needs and the
accounting period has been further seen to consider the beginning of the inventory with the
finishing of the accounting period. This has been turned into starting inventory with the various
types of the accompaniment of the time frame. The cost of the goods should be considered as per
the COGS. As this value will be too be high and will be considered based on the period of the net
income and consider the low amount of gross profit (Davidson & Stevens, 2013).
The given case of Morgan Fertilisers, has been able to identify the case with the high
value of the inventory in the balance sheet as it was taken by Oasis Ltd., successfully. Despite of
this factor, after two months, and the inventory of the company was overstated. It has been
further discerned that more than 50% of the inventory was obsolete was not supposed to include
the valuation count as per the inventory. The important consideration of the inventory needs to
be based on the actual value. Furthermore, MYH needs to value the stock valuation of the
management (Espinosa-Pike & Barrainkua-Aroztegi, 2014).
It is seen as the responsibility of the management of the physical conformation of the
entity. The main duty of the management has been considered as per the checking of the
inventories once in every year for establishing the financial statement formulation. The auditor
needs to consider the various types of the considerations which are seen to be made for the
physical investigation present to investigate the inventory and check for the survey of the system

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to record the changes based on the various types of the considerations made with the physical
inventory (Vosselman, 2013). The auditor needs to be further present with the inspection of the
inventory to check for the changes based on the dependability of such procedures. It has been
further discerned that the auditor may not opt for the inventory count which might be available
with the alternative measures and the adjustments made with the date of count which is recorded
accurately(C. M. et al., 2013).
The auditor needs to review the different types of the management and the information
and the various types of the internal control with regards to the re-counting, identification of the
obsolete and the non-moving or the rejected items. He also needs to consider the various types of
the procedures for the valuation of the WIP and the movement of the inventory. The general rule
of the auditor is not seen to be liable for the third party and clients (Horngren et al., 2015). The
considerations which the company needs to take for the third party are shown below as follows:
 The declaration of the financial is not true
 The auditor has been seen to recklessly ignore the facts is seen to not true
 The various error has been seen to be committed during the preparation of the final
accounts
 The various types of the negligence is seen to be based on the part of the employer of the
auditor
 The preparation of the financial statement is done intentionally so the third party may be
able to take appropriate action
The consideration of the main case has been further seen to be based on Esanda Finance
Corporation Ltd v Peat Marwick Hungerfords (1997). Based on this audit report case it has

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been discerned that the after the incidence of default of payment, Esanda was able to claim to the
auditors for the purpose of providing loan based on the audit report issued. This has been further
seen to breach the various types of accounting standard which considered being mandatory in
nature (Ocampo-Gómez & Ortega-Guerrero, 2013).
Conclusion
As per the present case, the auditor at MYH has been able to verify of the stock
information correctly and they have been also seen to accept the valuation. However, it has been
observed that the management was not seen to consider this as the main reason behind stock
obsolescence. Oasis Ltd. has been further seen to be considered under significant pressure for the
audit completion within the limited amount of time. This is done for the completion of the audit
in one month from the date in the balance sheet. It has been further discerned that can bring
forward the various consideration of issues pertaining to negligence charged in terms of the audit
of MYH.

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Reference List
Boyce, G. (2014). Accounting, ethics and human existence: Lightly unbearable, heavily kitsch.
Critical Perspectives on Accounting, 25(3), 197–209.
https://doi.org/10.1016/j.cpa.2013.10.001
Cameron, R. A., & O’Leary, C. (2015). Improving Ethical Attitudes or Simply Teaching Ethical
Codes? The Reality of Accounting Ethics Education. Accounting Education, 24(4), 275–
290. https://doi.org/10.1080/09639284.2015.1036893
Davidson, B. I., & Stevens, D. E. (2013). Can a code of ethics improve manager behavior and
investor confidence? An experimental study. Accounting Review, 88(1), 51–74.
https://doi.org/10.2308/accr-50272
Espinosa-Pike, M., & Barrainkua-Aroztegi, I. (2014). A Universal Code of Ethics for
Professional Accountants: Religious Restrictions. Procedia - Social and Behavioral
Sciences, 143, 1126–1132. https://doi.org/10.1016/j.sbspro.2014.07.565
Graham, C. (2013). Teaching accounting as a language. Critical Perspectives on Accounting,
24(2), 120–126. https://doi.org/10.1016/j.cpa.2012.01.006
Graham, C. M., Kelly, P., Massey, D. W., & Van Hise, J. (2013). One size does not fit all-
different strategies for teaching accounting ethics. Research on Professional Responsibility
and Ethics in Accounting. https://doi.org/10.1108/S1574-0765(2013)000017008
Horngren, C. T., Datar, S. M., & Rajan, M. V. (2015). Cost Accounting: A Managerial
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https://doi.org/10.2308/iace.2010.25.4.789
Kermis, G. F., & Kermis, M. D. (2013). Financial reporting regulations , ethics and accounting
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Ocampo-Gómez, E., & Ortega-Guerrero, J. C. (2013). Expanding the perspective and knowledge
of the accounting curriculum and pedagogy in other locations: The case of Mexico. Critical
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Roberts, J. (2014). Testing the limits of structuration theory in accounting research. Critical
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Shawver, T. J., & Miller, W. F. (2017). Moral Intensity Revisited: Measuring the Benefit of
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https://doi.org/10.1007/s10551-015-2711-4
Tormo-Carbó, G., Seguí-Mas, E., & Oltra, V. (2016). Accounting Ethics in Unfriendly
Environments: The Educational Challenge. Journal of Business Ethics, 135(1), 161–175.
https://doi.org/10.1007/s10551-014-2455-6
Tweedie, D., Dyball, M. C., Hazelton, J., & Wright, S. (2013). Teaching Global Ethical
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of Business Ethics, 115(1), 1–15. https://doi.org/10.1007/s10551-012-1364-9
Vosselman, E. G. J. (2013). Accounting, Accountability, and Ethics in Public Sector
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