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ACCA Strategic Professional · Advanced Financial Management · Strategic business and financial planning for multinational organisations

Lakeland Inc., a multinational, plans a plant in a country where bribes to officials are customary to obtain permits. The local manager says the payment is needed for the project NPV to be achieved. Which action by the senior finance adviser best reflects sound ethical and governance practice?

The adviser should refuse to include or disguise the payment, report it through the company's governance channels such as the audit committee, and reassess whether the project can proceed lawfully. Bribery breaches law and ethical codes regardless of local custom, so it cannot be treated as a normal cost.

  1. AApprove the payment but record it as a consultancy fee so the NPV is unchanged
  2. BDecline to include the payment, report the matter through the company's governance channels, and consider whether the project can proceed lawfullyCorrect
  3. CLeave the decision to the local manager because local custom prevails
  4. DInclude the payment in the NPV as a normal project cost and proceed

Explanation

Bribery is illegal under laws with extraterritorial reach and breaches ethical codes, so it cannot be treated as a normal cost or disguised. The adviser should refuse, escalate through governance routes such as the audit committee, and reassess whether the project is viable lawfully. Local custom does not override legal and professional obligations.

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