The following is a hypothetical case study where you are given an ethical problem and asked to work through the issues presented by the case study. In order to help you address the assignment requirements, please refer to ‘The Resources list to assist you’ on page 4 below.
The case study:
Garry is a financial controller at Just for you Pty Ltd (JFY). This company imports and distributes beauty products for both men and women and its employs around 100 staff, including Sue and Jane. Sue is the marketing manager of JFY; whilst Jane is the CEO as well as the sole owner of JFY.
JFY imports its products from China and distributes them all across Australia. Since its creation in 2000, JFY has had a history of profitability and growth. However, over the last two years, JFY has been facing fierce competition from other similar organisations and has been losing its market share. Also, JFY has been struggling to make positive returns for the last year and has just been able to cover its fixed costs for the last six months. Unless JFY makes a positive return in the next six months, it may have to go into liquidation.
Given the declining financial performance of JFY, Jane has been putting a lot of pressure on Garry and Sue to come up with innovative ideas that will give the company a competitive advantage in the market place and that will also generate an increase in profit margins.
One day, Sue and Garry have a phone meeting with Yong Lee. Yong is the owner as well as marketing representative of Xinni Ltd, an organisation which has been supplying beauty products to JFY for the past ten years. Yong has been a good friend of both Sue and Garry, for the some years now. Yong has suggested that Sue and Garry make a trip to Xinni Ltd in China, to discuss future business opportunities between Xinni Ltd and JFY.
Yong also mentioned it might be a good idea if Sue and Garry bring their family on the trip. Yong reassured Sue and Garry that Xinni Ltd will incur all the expenses associated with the trip. Yong added that the trip will give Yong’s family the opportunity to meet as well as get to know both Sue’s and Garry’s families.
During the phone meeting, Yong advised Sue and Garry that Jane need not know about the business meeting, as Xinni’s sponsorship of the Sue’s and Gary’s family trip to China is unrelated to JFY and is not part of the business trip.
Required:
Answer the following questions, i.e. (a) to (f) inclusive, based on the Case Study presented above on page 1 and assume that you are Garry, the financial controller of JFY.
(a) Identify the facts which are relevant to you, from the case study.
(b) List four key stakeholders who are affected in the case study.
(c) The APES code 110 sets out ethical standards which are applicable to Professional Accountants (including Financial Controllers). Discuss, with reference to the case study, the ethical principles which apply and/or which do not apply to Garry.
Set your answer out to part (c) as follows:
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