Institution affiliation

Answer 1.
John who was the Accountant in the Armidale Hardware violated the following sections of the 2006 APES110 Code of Ethics for Professional Accountants.

John violated section 100.1 which states that an accountant should not act to satisfy the needs of an individual who could be a client or employer. An accountant according to the section should act for the public interest. This means that the actions of an accountant should strive to benefit a number of people as opposed to benefiting an individual. He violated this section because he produced financial statements which did not show the actual business position of Armidale Hardware. He did this to satisfy the needs of his employer Anne who is an individual in this case instead of acting in the public interest.

Secondly, he violated section 100.4 which states that an accountant should ensure that he is objective, observes integrity and upholds the professional competence, confidentiality and acts according to the recommended professional behavior. In other words an accountant should follow or adhere to the five fundamental principles as listed above. He violated the section by providing financial statements that did not reflect the actual financial situation on the ground at the Armidale hardware so that they could get a loan from the bank. He did not uphold the principle of integrity in this case.

Thirdly, he violated section 100.6 which states that a member should not allow any kind of relationship to influence his decisions in complying with the fundamental principles of the accounting profession. In this case John is a brother to Anne who is also his employer. Therefore John opted to act against the code of ethics to please his sister. He chose to act as his sister was directing him rather than observing the code of conduct for the accountants. Since he had also invested in the business he felt as an owner of the business. This attachment to the business made him to provide the false documents since he also saw the need for the business to have a cash flow. This cash flow ensured that the business could continue running and the owner as well as John would continue benefiting from it.

He also violated section 100.7 which requires that if a member has no option to ensure that he sticks to the fundamental principles he should resign. However, John could not resign since he had invested his savings which was totaling to two hundred thousand dollars into the business. He had a personal attachment to the business. It is not wise for the accountants to invest in the businesses they are employed in. This is because they will be unable to make some critical decisions like John. Their hands are tied.

In addition, he violated section 110.1 and 110.2 which require that a member should be straightforward and honest in the profession. Section 110.2 states that a member should not produce reports or any other documents that contains false information. John did produce financial statements that presented false information. He was ordered by the boss Anne to do this. However due to his in depth knowledge of the accounting profession he should have convinced his employer on the need of providing the correct statements instead of consenting with her and acting unethically.

John also violated section 120.1 which states that an accountant should not compromise their reasoning due to influence by others or conflict of interest. John violated this section which seeks to ensure that the principle of objectivity is upheld. He was influence by his employer Anne and instead of standing for the right thing he produced the false financial statements. John should have stood firm and refuse to be influenced by his employer. John also compromised because of conflict of interest. Although he may have wanted to act ethically by turning down the request he did not. This could be because since he had invested in the Armidale hardware business he also would be happy if the business got the cash for it to continue running. He could not also quit because of the investment he had done in the business. He therefore after carefully considering he agreed to draw the false documents.

He also violated section 130.6 which claims that a member should make clients or employers aware of the conduct required of accountants. This is done to ensure that the fundamental principle of due care and competence is adhered to. John failed because when his employer Anne told him to produce the financial documents that did not reflect the true financial position of the business he just did it. He did not inform the employer that this was against the recommended code of ethics for accountants.

John also violated section 150.1 which states that it is important to observe the principle of professional behavior. This is one of fundamental principles enumerated in the Code of Ethics for professional accountants. Section 150.1 requires the accountants should observe the rules and regulations in their profession so that they do not discredit it. The accountants should not provide wrong information. This is because if a third party has access to the correct and relevant information this would portray the accounting profession negatively. John was asked by Anne o provide financial documents which had wrong information. These financial documents or statements were to be taken to the bank in order for the Armidale Hardware business to get access to a loan. This was very wrong since if the bank which is the third party in this case gets the right information the accounting profession will be portrayed negatively. The accountant who also did the drafting of the bank statements would also be viewed as being highly incompetent.

John violated quite a number of sections of the 2006 APES110 code of conduct for accountants. This is very wrong since it may portray John as an incompetent accountant. We are told that he has a post graduate qualification in accounting. This should have made him competent but on the contrary his conduct in this case proved otherwise. He being a member of an accounting association would not have allowed him to act as he did. It is important to observe the code of ethics not only in accounting or finances but in all the fields. Errors or mistakes done by some accountants such as John would make the accounting profession look as if it has no code of conduct.

The ethics or code of conduct can be seen as the rules set aside and which should be adhered to by the professions in that particular field. The ethics have the following benefits as stipulated by Sims (1994, pp 10). The ethics makes the accountants or the professionals to have a strong public image. This is because they are seen as organized people who must be efficient since they have guidelines in their profession. However some deviations from the ethics could cost people their jobs and the accounting profession could lose the image if the truth is known.

Secondly, the ethics ensure that the errors of omission are avoided and thus the workers turn out to be productive. However a case like that of John does the contrary and the production may instead reduce.

Cottell and Perlin (1990, pp.25) supports Sims arguments that ethics are important in all organizations. The accounting profession deals mostly with the cash or money in an organization. This is a very sensitive issue that could even lead to some accountants being jailed or sacked in case they mishandle the finances or the financial documents. John should therefore be very careful and ensure he follows the ethics in all his duties.

In conclusion, if all the organizations are to run effectively and to ensure that the professionals perform as it is required they should all stick to their code of conducts. However it is also important that the code of conduct be reviewed after some period of time in order to ensure that the changes in the field are reflected. This is because if there are technological advancements in the field this should be shown in the code of conduct.

Answer 2.
Yes. Johns behavior would be considered ethical. The University of New England (2010, pp. 7-19) divided the various normative theories into two broad categories which are the consequential and the nonsequential. The consequential theories are mainly concerned with the consequences of an action. If the consequences are right then the action is viewed as ethical. However if the consequences are wrong the action is in turn unethical.

After a careful consideration of all the normative theories Johns behavior can be seen to be ethical under the consequentalist and some nonsequentialist theories. The university of New England (2010, pp. 8-10) discusses these consequentalist theories which are later subdivided into the egoism and utilitarianism theories. The egoism theories can be further subdivided into individual egoism and group egoism.

Under individual egoism, John saw it important to provide the false financial statements because of his long-term self interest. The business was in a dire need of money and they feared that if they presented the correct statements to the bank they would not be given the loan. Therefore since he had invested his savings which added up to two hundred thousand dollars into the Armidale Hardware business he found it right to provide the false statements. This is because if they did not do this they would not get the bank loan and the business would be closed leading to him losing the savings he had invested in it. Secondly, if the business was closed John would also lose his employment and that contributed to him providing the false statements. This two were his long-term interests that made him agree to provide the false financial statements.

There was also the application of the group egoism theory. In this case a group is a business or an institution. On the same note if the business did not get the money it would most likely not be in a position to continue running. Therefore to salvage the business John found it ethical to provide the false documents. He did this to protect the long-term interest of the business.
 
The second theory under the consequential theories was the utilitarian theory. Under this ones acts are judged to be ethical if they are aimed at balancing the good over the bad. John saw it good to provide the false statements and save the business. He considered saving the Armidale hardware business a good which was more than the evil of presenting false financial documents to the bank.

Additionally, there was the application of nonsequentialist theories which include the following
As an introduction, these theories do not consider the consequences of an action. They instead consider the nature of the action.

The first one is the deontology. In this theory the action is judged to be right or wrong after considering its nature. Under this we have the Kant perspective which states that an action is right if only we recognize a duty that we try to accomplish. Therefore, according to this theory John had seen the duty of ensuring the business continues running. However this would only be done by getting a loan from a bank. There was a hindrance to getting the loan which was that if they provided the correct information about the financial position of the business at the moment they could not be given the loan. Therefore for the business to continue running John had to provide false financial statements for them to get the loan. Therefore in view of this theory his actions were ethical.

Trevino and Weaver (2010, pp. 314) states that in most cases the acts of a person can be judged as being ethical or not under a number of theories as has been done in the above discussion. This is because the theories look at different aspects to determine whether an action is ethical or not. In a concluding remark the behavior of John can be proofed to be ethical according to the individual egoism and the group egoism theories under the consequential theories.

His actions can also be seen to be ethical under the utilitarian theory still a consequential theory. Under the nonsequential theories his actions in this case can be shown to be ethical by using the deontology theory.

Answer 3.
Had John asked me for advices before he presented the false financial documents I would have advised him to abide by the fundamental principle enumerated in the 2006 Code of conduct for accountants. This because if the bank came to realize that the documents were false and it sues the Armidale Hardware business for presenting wrong information John would suffer. This is because he is the accountant in the business and he was the one who drew the documents. Although John may try to defend himself by saying that the business owner ordered him to do it, he would be defeated since this was just a verbal directive. It was not written and therefore he would have nothing to proof or show as evidence that the owner ordered him to do so.

Secondly, John is learned since he has a post graduate qualification in accounting and finance. He is also a member of the professional accounting associations. This shows that he clearly understands what is expected of him in the accounting profession. Therefore saying that Anne ordered him will just be seen as using her as a scapegoat.

I would also advise John to seek audience with his employer Anne and try to brief her on the repercussions of the action that she wants him to do. By doing this the employer may consider and decide that they look for finances from other organizations if the banks cannot provide them with the money. Most employers although they may own a lot of wealth they are not very informed and briefing Anne would make her see the dangers of acting as she is suggesting.

Thirdly, if this does not work out for John he should also consider quitting the job other than being involved in actions that will have legal repercussions later.

In conclusion, I would advice him to adhere to the code of conduct for the accountants. It is very bad of John to have acted wrongly since according to Kerr and Smith (1995, pp. 987-995) ethics in the accounting profession are incorporated in the teaching of the course. There is no excuse that John was not aware of them.

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