ACCA Applied Knowledge · Business and Technology · Ethical conflicts and dilemmas
An ACCA member discovers that her finance director has overstated profit to meet a bank covenant. She has evaluated the facts, the relevant fundamental principles and the alternatives. Having followed internal escalation without a satisfactory result, which action is MOST consistent with a sound ethical framework?
The most appropriate action is to seek professional or legal advice, document the matter and keep it confidential unless disclosure is legally permitted or required. Ignoring the issue breaches integrity, while public disclosure on social media would breach confidentiality without any legal basis.
- AConsider obtaining legal advice or advice from the professional body, and document the matter, while keeping confidentiality unless disclosure is legally permitted or requiredCorrect
- BIgnore the matter because the director is senior
- CImmediately publish the details on social media to protect the public
- DResign and say nothing to anyone, including the professional body
Explanation
After internal escalation fails, the member should consider further steps such as seeking professional or legal advice, documenting the matter and only disclosing where law permits or requires. Ignoring it breaches integrity, and publishing on social media breaches confidentiality. Resigning silently does not resolve the issue and may fail legal duties.
Did you get it right without looking?
One question tells you little. A timed set on Ethical conflicts and dilemmas shows your real accuracy, how long you take and where you lose marks.
More Ethical conflicts and dilemmas questions
- Which of the following is the best example of an ethical dilemma, as opposed to a simple breach of rules?
- An accountant in business has just been offered a large personal loan on unusually generous terms by a major supplier whose invoices she app…
- Priya, an accountant, is under pressure from her finance director to approve an expense claim she believes is inflated. She is worried about…
- Maya, a trainee accountant, discovers that her manager has been recording expenses in the wrong period to improve reported profit. According…
- A financial controller prepared a provision estimate last year. This year she is asked to review and approve the same estimate as part of th…
- Which of the following is a recognised safeguard created by the employing organisation that helps accountants resolve ethical conflicts?