Analyzing Ethical Issues: A Comprehensive Case Study in Accounting

This case study delves into ethical dilemmas within the accounting profession, focusing on issues such as employee misconduct, breaches of confidentiality, and conflicts of interest. It identifies key parties affected, including managers, staff members, and the personnel department, and assesses the impact of these ethical issues on the organization. The study proposes courses of action, such as clarifying staff procedures, seeking legal advice, and fostering open communication. It also determines threats to fundamental principles like confidentiality, integrity, and professional behavior, and outlines safeguards at the professional, work environment, and individual levels to mitigate these threats. Furthermore, it discusses common ethical threats faced by accountants, including self-interest, self-review, advocacy, familiarity, and intimidation, providing detailed explanations and safeguards for each. The case study emphasizes the importance of ethical awareness and proactive measures to maintain professional standards in accounting.

Running head: ETHICS OF ACCOUNTING PROFESSION
ETHICS OF ACCOUNTING PROFESSION
Name of the Student
Name of the University
Author’s note

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Case study 1:
Identification of the relevant facts of the ethical dilemma:
Ethical dilemma is a situation in which it is difficult to make choice between the two courses
of actions and because of which the moral principles are transgressed. The ethical dilemma in
the given case study is:
 Men behaving badly and badmouthing the colleagues
 Employed for full time and leaving early
 Overworked colleagues due to the absence of junior staff member and she being very
competent.
Why the issue is regarded an ethical problem:
The issue is considered as ethical problems because the act is not complying with the
fundamental principles. It is essential for the managers to comply with the fundamental
principle of integrity that requires him to be honest and straightforward in all the business and
professional relationships. Therefore, the manager who employed the full time junior worker
should not allow her to leave early as it poses a threat to the integrity of the business. With
regard to due care and professionalism, the manager should maintain the skills and
professional requirement at the level, which ensures that the client receives the competent
services, and the service is accordance with the professional and technical standard. The
junior staff member is missing a number of team meetings when important decision is done
on the project which would impact the capability of organization to provide competent
professional services. In addition to this, the manager or the employee of organization should
not use the information to their personal advantage. Moreover, they also owe a duty of
confidentiality to the staffs that forms a part of organization. In this regard, it is the duty of
the managers to maintain the confidentiality of the junior staff member because she is facing

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difficulties due to some family issues and not willingly missing the meeting and leaving
early. Therefore, it is required by the manager to maintain confidentiality to the staff
members of company.
Identification of parties affected:
The parties that are affected due to the observance of ethical dilemma are manager,
junior staff members and her associated colleagues. Some other staffs that might be affected
due to the dilemma might be the personnel department.
Impact of ethical issues:
The ethical issues identified from the given case study would have considerable
impact on the employees of the organization.
Possible course of action:
For dealing with the identified ethical issues, it is required by the managers to check
the relevant facts along with the clarification of the staffs procedures should be done with the
personnel departments. In addition to this, the managers for addressing the observed ethical
dilemmas can also take legal advice. The matter should be discussed with the junior staff
members and there should be a more flexible approach to the team meetings (Thomas et al
2017).
Determination of threat to compliance:
The given case poses a threat to some of the key fundamental principles such as
confidentiality, integrity and professional behaviour (SURYANTO 2017).
Safeguard to eliminate the threats identified:
The safeguards that are essential to reduce the threats are categorized in to three parts these
are

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 Profession
 Work environment
 Individual
Profession
These includes
 The requirement of CPD education and training
 Regulations of corporate governance and professional standards are to be framed
 Professional work and disciplinary proceedings are to be monitored
Work environment
There are several examples like
 Internal control system
 Review process
 Disciplinary actions
 Code of ethics of the organization
 The key engagements are to be reviewed and reported separately
Individual
 Professional standards are to be followed
 The contentious issues are to be recorded
An ethical threat occurs when a person or corporate body is forced to avoid their code
of ethics.
An ethical safe guard provides the guidelines to remove the ethical threats. The ethical
threat are applied to accountants whether in practice or in service. The safe guard is different

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for different types of threats. it is expected from the professional accountants that they are
always aware of the fact that the fundamental principles like integrity, objectivity,
professional competence and due care, professional behaviour may be compromised and
therefore they should try to adopt such methods that will help to mitigate each threat as it is
identified (Grace and Cohen 2015).
. Generally, there several kind of ethical threats but the most common type of threats
that the accountants faces are stated below:
 Self-interest.
 Self-review
 Advocacy
 Familiarity
 Intimidation
The following table will provide the details of the various threats and the various safeguards
that will be required to prevent such ethical threat
Ethical threat Safeguard
Intimidation threat
Conflict between requirements of the
employer and the fundamental principles
The examples of such threat are acting
against the laws or guidelines or against any
professional standards
To prevent such threat it is required to take
the suggestion of employer or professional
advisor
The employer can provide dispute solving
methods
Legal suggestion can be taken from any
lawyer
Intimidation threat
Preparation and reporting of information
This type of threats can be eliminated by
consulting with the superiors in the

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It is essential for the accountants to prepare
different type of report on informations
transparently adequately and honestly.
Though in many cases it is found that the
accountant has been forced to provide
misleading information and manipulation in
the accounting transactions
company
By taking suggestion from the employees
who are in the corporate governance
department of the organization
Suggestion from the professionals are also
effective to prevent such kind of threats
(Voss 2017).
Intimidation threat
In this kind of threats the accountants are
forced to induce junior members or staffs to
manipulate a decision or to get any
confidential information or evidences
(Steele, et al 2016).
The accountant should not offer such
inducement.
If the accountants are forced to induce any
other then he or she can make a complaint
to the directors of the company.
The accountant can take the help of any
lawyer.
Self interest threat
Inducement
In this type of threats many lucrative offers
are given to the accountants to encourage
the accountant to adopt unethical practices.
The inducements may include expensive
gifts , undue advantages can be provided or
by giving cash as bribe.
The fundamental principles like
confidentiality and objectivity can be
threatened by such actions .
The accountants should not accept such
offers.
The accountant should inform the senior
employees about such incidents.
The accountants should try to manage such
situation by applying his own intelligence.
The accountant should consult with any
legal adviser regarding such issues (Johari
Mohd‐Sanusi and Chong 2017).
It is advised that the accountant should also
inform the directors of the company about

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such matters.
Self interest threat
Financial interest
In this type of cases, the accountant himself
or any of his relative has financial interest in
the company where the accountant is
performing his duty. some of the instance of
such cases include the accountant being
offered a bonus based on the financial
statement result which he is authorized to
prepare or the accountant is holding share
options in the company (Ferguson et al
2016).
This kind of threats are [prevented by the
following methods
The remuneration of the accountant is to be
determined by any independent member of
the management (Cullinan Mahoney and
Roush 2018).
The accountant should disclose his or her
interest in the company with em-ployees
who are in charge of the governance
committee.
Suggestions can be taken from the
experienced members or from the legal
advisors.
Self review threat
Having sufficient expertise
It is expected that the accountants should
show honesty regarding their level of
expertise. They should not confuse the
employers by exaggerating their level of
expertise than what they actually possess.
This kind of behaviour of the accountants
lead to the situation of time pressure to carry
out duties being provided with partial
information or having inadequate
The accountants should acquire additional
training and advice from the experts of this
field.
Spending more time in duties to manage the
lack of speed at the initial stage of the job
(Ha and Chen 2018).

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experience (Christensen Cote and Latham
2016).
Confidential information
The accountants are aware of all the
financial condition of the company so they
are the most trusted employees in the
organization . the accountants should not
disclose any confidential information to any
one unless there is a right or obligation to
disclose or they have received authorization
from the client.
However in certain circumstances the
accountants are forced to disclose this kind
of information as a result of the compliance
with legal process like the anti-money
laundering, in this kind of situation the
conflict arise between confidentiality and
the need for disclosure (Ogbari et al 2016).
The safeguards that can be taken in this kind
of situation are stated below
Disclose information which are related with
the statutory requirements like the money
laundering regulations (Banks 2016).
The accountant should follow the disclosure
guidelines of the employer and report to the
governance department. Or else disclosure
should be made on the basis of the
assessment of the legal obligation whether
members of the public will be negatively
affected, the importance of the matter, the
possibility of repetition reliability of the
information, reasons why the employer
does not want to disclose the information
(Kennedy Welch and Monshipouri 2017).
In this kind of situation, the accountant can
act as the whistle blower and give alarm
calls to the company about the occurrence of
disclosure of any confidential information
(Goldman et al 2016).
Familiarity threat The accountant should not be allowed to

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As the accountant while doing the job for
long time in the organization he or she
become very familiar with the process of
recording the financial transactions. This
enables the accountant to find out the
loopholes in the system easily and make
wrong use of the power that they have. As
they know all the gaps in the accounting
system so they start manipulating the
accounting transactions which become a
major threat for the company. This also
violates the fundamental principle of
integrity (Mason 2017).
assess all the transactions for long time and
various parts of the accountant should be
delegated to different persons.
Advocacy threat
Advocacy threat occurs when the
professionals are authorized to act on behalf
of the clients to point that subsequent
objectivity may be compromised (Clarke-
Doane 2015). The circumstances which may
give rise of the advocacy threat are sated
below:
Giving comments in public about the future
events
Situations where the information is not
complete or in case the arguments being
Consider the necessity of giving the job of
accountant to the professional.
Assigning the job to a person who is reliable
and have good experience in relation to the
recording of financial transactions (Chow et
al 2016).
Involve a highly qualified accountant who
can assure both confidentiality as well as
efficiency.
Ensure that the professional person is not in
any way related with any substantial interest
of the organization.

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supported are against the legal guidelines.
Promoting shares in a listed company which
is a client of the accountant.
Ensure that the company does not involve in
any related party transaction with the
professional accountant.
There should not be any conflict of interest
with the professional accountant (Anzeh and
Abed 2015).
Self review threats
The self review threat occurs from the
following circumstances
A firm is issuing an assurance report on the
efficiency of the operation of the financial
system after designing or implementing the
system (Moss et al 2016).
A firm has prepared the original data used to
generate records that are the subject matter
of the accountants engagement (Scott et al
2016).
A member of the accountant team being a
director or officer pf the client.
A member of the accountant team being
currently employed by the client in a
position that has significant influence over
the subject matter of the engagement
(Menzel 2016).
The firm performing a service for an client
The safeguards for self-review threat
Having a professional accountant who has
not involved with the non-assurance
services then in that case it is essential to
review the non-assurance work performed
by such accountant.
Having a professional accountant who was
not a member of the assurance team then
review the assurance work performed.
Take the advice of any independent third
party like an independent director .
Discuss the ethical issues with the
employees who are in charge of the
governance department of the company
(Mintz 2016).

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that directly effects the subject matter
information of the accounting engagement.
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