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ACCA Strategic Professional · Strategic Business Leader · Professionalism, ethical codes and the public interest

Orion Foods' audit partner, Tomas, finds that the client's management intends to continue selling a product that its internal tests show is harmful, and the financial statements do not disclose a related provision. The matter is not yet illegal under local law. Shareholders would benefit if the issue stayed hidden until after a planned share issue. Which course of action best demonstrates professional accountability in the public interest?

Tomas should require proper disclosure and provision, escalate to those charged with governance, and modify the audit opinion or resign if management refuses. The public interest extends beyond legality and shareholders, and confidentiality does not justify concealing a material issue, though going straight to the press would bypass proper channels.

  1. ARemain silent because the product is not yet illegal and the client's confidentiality must be preserved
  2. BInsist on appropriate disclosure and provision, escalate to those charged with governance, and consider modifying the audit opinion or resigning if management refusesCorrect
  3. CDisclose the product problem immediately to the press to protect consumers
  4. DAccept management's view to protect the share issue, since shareholders are the main users of the accounts

Explanation

The accountant must act with integrity and in the public interest even where the law is silent, so Tomas should press for proper disclosure, raise it with those charged with governance and use the audit report or resignation if necessary. Going to the press breaches confidentiality without first using proper channels and legal protections. Remaining silent or favouring shareholders ignores the wider public who rely on the audit.

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