The concept of integrity, objectivity, professional

The concept of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior have been developed in the code of ethics of professional accountants to guide the professional accountants to act ethically.

Required:

Do you think this code of ethics works? Support all your answer with example(s).

Mr. Hiroto is one of four partners of ABCD Audit Firm. Three years ago, ABCD Audit Firm was appointed as an external auditor for WXYZ Ltd, a successful and fast-growing company responsible for preparing year-end accounts and tax returns. WXYZ Ltd, which initially traded with a handful of employees, now has 5,000 employees, still below the size of a company that requires a statutory audit.

Due to the close relationship of Mr. Hiroto and Mr. Dickson, the CFO (which is also the owners of the WXYZ Ltd) and some of the employees in WXYZ Ltd, Mr. Hiroto understands that employees’ purchases of company-made goods are authorized by the production manager and then processed outside the accounting system. Proceeds from these sales are used to fund the company’s Halloween party.

Required:

i. Discuss in detail the 4 (FOUR) key codes of ethics in the case study. 

ii. Identify relevant facts, the affected parties, and who should be involved in the resolution. 

iii. Recommend Mr. Hiroto the possible course of action.