This is a n Accounting principle subject. The assessment and will be send by file .pdf - Case Study Example

Professional Competence and Due Care A professional accountant is expected to demonstrate diligence when executing his duties and should abide by professional standards when executing his professional duties. Considering whether it is within the mandate of the accountant to counter-sign checks and ensuring that the hotel receives professional services in line with the underlying regulations of the accounting profession would translate to the observation of professional competence and due care.

Confidentiality A professional accountant must observe confidentiality of information under his care and should not in any way disclose such information to unauthorized third party. Not disclosing the findings about the whole scenario to any third party and not taking advantage of the findings for personal gain would amount to maintaining the principle of confidentiality. Professional Behavior A professional accountant should act within applicable laws and regulations and shun any act that likely to discredit professionalism.

Ensuring that services remain within the law and avoiding any action that would put the profession into questions amount to professional behavior. Q2. a. The parties involved in the case include the company’s directors (husband and wife), the staff of the boutique hotel, the financial institution that mortgaged the hotel, and the community as a whole. For the company’s directors, especially that wife, the transactions are happening in her absence. Therefore, there is a possibility that taking no action would result into huge financial losses on her side through continuous check withdrawals of the recently acquired mortgage for the hotel.

For the mortgaging firm, there is a likelihood that the hotel will not be able to pay back its mortgage leading to a huge financial loss. However, if the loan is secured, the mortgaging firm would recover the amount through seizure of the company’s principal asset, a boutique hotel. All the staff of the company would lose their job in the near future because the company would not be in a position to pay them. Moreover, there is likelihood that the company may be declared bankrupt. The closure of the company would have negative impact on the community where it is located because it would cut down job opportunities and disengage those who are currently employed courtesy of the company. b. If I decided to take action, I would consult the audit committee of the company, if there is any and summon the board of directors to shed light on the harmful effects of such fraudulent dealings.

I would give my stand to the company’s directors by stating pointblank that I am not ready to be party to the fraudulent deal. First, I would ensure that I act within the fundamental principles of the accounting profession. I would then identify specific factors relevant to the conflict resolution process, which in this case is the unauthorized check withdrawals made by one of the directors of the company. I would then decide the best course of action by weighing the likely consequence of each alternative course action.

I would then document the discussions held and decisions arrived at during my discussion with the directors and the audit committee. If the practice persists, I would then contact relevant professional body and legal advisors. A professional