Case Study: Ethical Issues in Audit - Pet Plus Pty Limited Analysis

This audit assignment presents a case study involving Pet Plus Pty Limited, an Australian company, where the accountant, Janice Roberts, discovers irregularities in cheque requisitions. The CFO, Brett Andrews, dismisses her concerns, leading to an ethical dilemma as Roberts suspects the CFO and GM of misappropriating funds. The assignment explores the stakeholders involved, the ethical issues at play, and the applicable principles of APES 110. It then evaluates alternative courses of action, including confronting the management, whistleblowing, or reporting to auditors. The assignment concludes by recommending reporting the fraud to auditors or higher management to prevent further financial misconduct and uphold ethical standards. This case highlights the importance of ethical decision-making and the consequences of financial fraud within a company setting.

Audit Assignment

1
By student name
Professor
University
Date: 25 April 2018.
1 | P a g e

2
Facts of the case
In the given case, Janice Roberts, accountant of one of the companies Pet Plus Pty Limited.,
situated in Australia comes to know of one of the irregularities in the cheque requisitions where
the payee is an unknown entity but still the supporting documentation is being attached. She
reports the same to the CFO of the company Brett Andrews but instead of paying heed to this all
critical issue, he assures her that nothing is wrong and to worry about and further not to raise this
issue again or else she might need to look for another job. However, Janice’s assistant confides
that the CFO and the GM of the company together are involved in stealing and misappropriating
large sums of money for their personal use.
Stakeholders in the scenario
The relevant stakeholders in the given scenario includes the accountant (Janice Roberts) and her
assistant (Audrey Miller) as they are aware of the issue and illicit transactions being carried on in
the company. The CFO as well as the GM are also the stakeholders as they are directly involved
in the wrongdoing. Besides this, a major section of the stakeholders would be the investor and
the shareholders of the company who would be taking financial and economic decision based on
the company’s performance, unknown of the embezzment of money by the top management.
Ethical Issue involved
The ethical issue involved here is that the top management of the company themselves including
the CFO and GM are involved in misappropriation of the money from business through cheque
requisition in the name of unknown entity supported by documents. Secondly, another ethical
issue involved is that the accountant of the company Janica is well aware of the issue but due to
the threat by CFO and the fear of losing the job, she is keeping quiet on the issue.
Major principles, rules, values applicable to the case
As per APES 110, which deals with the Code of Ethics for the Professional Accountant. The
moral principle involved is here that the people at fault and specially the accountant should
understand what is wrong, what is right, and how the same is going to affect the shareholders and
investors at large. The rules says that it is a part of the self-advocacy threat as if she would take it
at a higher level or blows the whistle against the management, it could be detrimental to her own
interests and in the process she could lose the job. However, the values as per APES 110 states
that she should follow the ethical behaviour and should not compromise with her integrity and
report the issues around stealing and theft to the higher level as well as the auditors so that
everyone gets aware of the same.
2 | P a g e

3
Specifying and comparing the alternatives
There are several alternative courses of action available, which are mentioned below:
1. She can ask the CFO and the GM to commit their mistakes in front or management or
else she would report it to the higher management directly or through mail.
2. She can do whistle blowing anonymously if she’s is scared of losing the job so that
everyone becomes aware of the same and the investigation is started.
3. She can report the same directly to the auditor.
4. She can keep quiet and let it go as well as instruct her assistant Audrey Miller as well not
to disclose the same to anyone.
The options stated above are in the order of viability. The first option is better than the rest of the
others as if the management (CFO and GM) themselves accept the wrongdoing and correct the
same, it would be good for the future of the company. Option 2 and 3 might lead to reporting the
same in the audit report of the company and thus it would lead to erosion in value of the
company as well as shareholders trust. Option 4 is the worst of all where unethical behaviour is
chosen over ethical one.
Consequences of each alternative decision option
In the given alternatives, the 1st and the 2nd option are the most viable ones as the issues is
resolved within the company itself whereas on the other hand, in case of option 3, the same
might be reported in the annual report as a fraud and might be material enough to lose the
interest of the shareholders in the company. Option 4 is unethical and not acceptable completely
as it means that even the accountant and her assistant are equally worrying and privy to the
wrong transaction.
Ethical Decision
The most ethical decision is to report the same to the auditors, to higher management of the
company through whistle blowing so that the fraud in the company can be avoided.
3 | P a g e