Ethical and the Legal Complexities-Free-Samples for Students

Questions: 1.Using the American Accounting Association (AAA) Ethical decision model explain the Ethical Issues involved here and recommend a course of action for Jacqui. 2.With reference to relevant case law, prepare a report for the Managing Partners of MYH on the strength of any negligence case that Oasis might bring against MYH. Answers: Introduction American Accounting Association (AAA) is seen to be having a reputable history for being a premier community of the accountants in academia. The membership diversity has been further able to create an environment with the appropriate collaboration and innovation (George et al., 2014). The report will be addressing the different types of the ethical and the legal complexities which need to be considered in the audit division at MYH. The main consideration for the recommendations has been implemented with the use of AAA standard. The latter part of the report has been further able to state on the various types of the concerning issues which areas seen to be associated to the application of the prepared recommendations for the managing partners of MYH and based on the relevant case study. 1.AAA Model Determination of Facts The given study is seen to be based on the MYH accounting firm, which has been seen to be mainly operating in NSW and Queensland. Morgan Fertilisers has been identified as one of the reputable client of the company, with the main operations in Tamworth and Toowoomba. The client has been seen to be changing the contractor for waste management related to Dumparound Ltd. A senior auditor has been seen to be knowledge of the activities of the community activities and she is aware of the fact that council are investigating Dumparound Ltd. in order to determine the toxic waste in one of the sites (Azimi Naim, 2015). Identification of ethical issues The various types of the ethical issues has been seen with Morgan Fertilisers Pty changing the contractor to Dumparound Ltd. for the purpose for waste management. The important consideration of ethics has been further raised by Jacqui Leak, who is aware of the Dumparound being investigated by the local council for toxic waste level. It has been further that Morgan Fertiliser and Dumparound contract has not specified for the damages nor signed by Dumparound. This particular contract is seen to be held for 3 years and Jacqui is substantially concerned about the implications. Identification of major principals and rules, values The prevailing ethical issue and the legal problems have been identified with the AASB 102 on valuation of inventories. The various types of the considerations of the valuations needs to be recognized as per the terms of asset and the same needs to be carried over for the revenue recognition. The main APES code applicable is APES 110 Code of Ethics for Professional Accountants has been seen to be applicable with Section 310 conflicts of interest. As per this application the members of MYH, they are expected to support the different types of the activities related to the support the legitimate and the ethical objectives. This has been seen with the application of the relevant procedure in the organization. Specification of the alternatives The primary specification has been considered with the evaluation of whether the adjustment in the inventories and the inventories between the year ending and the dates associated to the physical count is seen to be appropriately recorded. Furthermore, the auditor needs to provide the analysis as per the inward and the outward movement of the stock as per the date of cut off and this is done as per the count date. This is established as per the validity of the date as per the year date. Comparison of values and alternatives The values have been further seen to be compared based on the application of APES 110 Code of Ethics for Professional Accountants. This particular section is seen to be applicable as per the Section 310 conflicts of interest vs. AASB 102 on valuation of inventories. The alternative APES ruling has been further based on the responsibility of the member to employ the organization with the particular needs which has been seen to be considered as per the supporting needs of the organization. As per the rulings of AASB 102, the important considerations have been based on measuring of the net realizable cost or value of the asset which is carried forward as per the revenue recognition. The cost of the inventories has been further seen to be considered as per the different types of the evaluations which are seen to be relied on the factors which are specific with making the assets ready for use. Identification of the alternatives access the consequences If the value of the inventory is seen to be overvalued, the different types of the considerations made for the net income needs to be evaluated based on the gross profit of the company. The overvaluation of the retained earnings is further seen with the need to be overvalued based on the considerations of the retained earnings. The equity value and the total assets is related to the current assets and total assets, which may be overvalued based on the retained earnings. Recommended Decision Oasis Ltd can bring forward the negligence charged in terms of the audit of MYH. However, this needs to be considered as per the various types of the consideration which has been seen to be based on the evaluation made as per the sole decision taken by the company to deal with the given case. 2.Report for the managing partners of MYH The various types of the consideration made with the APEs and the AASB 102 has been seen to be based on the various types of the consideration which has been seen to be related to the error in the valuation of the inventory and the cost of the recognition of the assets, which has been carried forward with the revenue recognition. The various requirements of the inventory need to be measured as per the realizable value or cost, whichever is lower. The main cost associated to the inventory has been further seen to be related to the conversion cost, purchase cost and the various types of the cost which has been related to the making the asset as per the specified purpose. It further noted that the inventory cost is not expected to be recovered as per the evaluated expenses for the completion of the assessed expenses to the various types of sales policy. The important assumption for the recording of the inventories has been based on the realizable amount is considered to be reliable in n ature. This amount should not be carried in terms of the excess amount realized from the sales amount. In case of the overvaluation of the inventory the gross profit needs to be overstated. The primary impact needs to be overvalued with the retained earnings, equity of stockholder and the retained earnings. The net income has been seen to be considered for overvaluation of inventory with lower amount of the cost of goods sold which is charged for the revenue. The inflated amount of the net profit has been indicated with the equity of the retained earnings and stakeholders. Due to the overvaluation of the accounting period and the inventory, the accounting period has been changed with the starting of the inventory with the finishing of the accounting period. This has been further seen to be taken into consideration with the starting of the inventory towards the completion of the accounting period and has been further considered in the beginning of the inventory. This has been achieved in the given time frame. The main period of the cost associated to the goods needs to be considered fo r COGS. As this value is seen to be too high, this will be too high, this will be able to bring the period of the net income considered with the low amount of gross profit. Based on the given case of Morgan Fertilisers, they has been identified to be carrying high value in the inventory and the same has been reflected in the balance sheet of the company after being taken over by Oasis Ltd. Despite of this, two months later the inventory of the company has been seen to be overstated. It has been further discerned that more than 50% of the inventory was obsolete and this was not supposed to be included in the valuation count as per the inventory. The different considerations of the inventory are based on the actual value. Furthermore, MYH needs to consider the valuation of the stock with the valuation of the management. The confirmation of the physical count of the inventory is responsibility of the management for the entity. The main duty of the management has been further based on the strategy of checking of the inventory, once in every year for establishing the financial statement. The auditor needs to do a complete review for the technique get the proper and suitable consideration of the audit confirmation and tallying of the same with the physical inventory. In addition to this, the auditor needs to be present to inspect and make a survey around the management for recording of the changes as per the dependability of these procedures. The auditor is not allowed to opt for the inventory count which is seen to available for the alternative measures and the adjustment made in the inventory. The auditor needs to review on the different types of the internal control and management information to do internal control and recounting, tagging, stock sheets and the identification of the various types of non-moving and obsolete items. He also needs to account for the procedures for the valuation based on the WIP along with the inventory movement. The general rule of the auditor has been seen with liability towards the third party and the clients. The third party considerations have been stated below as follows: The truthfulness of the financial statement has not been depicted The auditor may has recklessly or intentionally ignored the facts, which is een to be untrue The errors has been committee in the preparation of the final accounts As per Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997), case the corporation lent the money based on audit report. However, there has been default of the payment which has been further identified as the breach of mandatory accounting standard. Conclusion Based on the study although MYH verified the stock correctly, it accepted the valuation, but the management did not consider this due to obsolescence of the stock. The evidence of Oasis Ltd. has significantly considered under pressure and the completion of the audit in the limited time period. Reference Azimi, D., Naim, M. (2015). Impact of Organization Internal Factors on Ethical Intensity of Accountants in Afghanistan. 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