Solution for The Case Study Assignment

Identify the relevant facts of the above case study to your role as financial controller of Y Pty Ltd.
            As my role being in the Y Ltd. is of the financial controller, financial controller is the one whose is responsible for all the financial activities of the firm which is (Y. Ltd) here. The financial controller has to take care of the fact that the company is successfully making the profits and it is able to sustain in the future. It is the duty of controller to maintain the minimum amount of finance that is required for the continual sustainability of the company. If the company is not performing well the controller has to take certain measures to ensure the company’s better performance. In this case as I am the financial controller of the Y Ltd. It is my responsibility to maintain the performance of Y. As the performance of Y is declining so it is my responsibility to enquire the root cause of decline. And take the required steps to make the performance better again.
List the four key stakeholders affected by the above case study.
Stakeholders are those who would have invested in Y Ltd. So they would be affected by the lower performance of Y. In this case the following are the key stakeholders that would be affected:

  • Sam (The owner of Y)
  • John (As being the financial controller of Y)
  • Employees (12 persons)
  • Financial Creditors (Banks, Bond issuers)

(c) With reference to the relevant Code of Ethics for the Professional Accountant (CPC) identify and discuss the relevant ethical principles John should consider in dealing with this situation.
Set your answer out to part (c) as follows:
Ethical Principle                             Discussion (How the principle applies to the case)
Ethical Principle:
                                    Disclose the Information to the owner
Discussion:
Bing the financial controller of the Y Ltd. It is my responsibility disclose every information that is related Y, to the owner of the Y. It is not ethical to hold the control of someone’s company but do not disclose the information that is related to the company. In the present situation I have the responsibility to disclose the whole situation to the owner, that company Y is declining rather it is going to collapse. Further after disclosing, I would have completed by responsibility and it would be up to Sam how he handles the situation.
The offer which Rachael has made me is quite appealing as the company of Rachael is also going to take the contract of the two products which my company is currently distributing. Y is going to collapse and I have the offer to settle in a better place but at the cost of bringing the whole competent staff of Y to Rachael Company. The owner of Y is not aware of the whole scenario. Hence it would not be appropriate to keep the information with me. Being the financial controller of Y I should first describe the whole situation to the owner and the employees as well. This action could result in worse situation but I should keep the responsibility.
(d) Explain the consequences if each of the following actions that John (i.e. you) could choose:

  • Say nothing
  • Tell Sam

Say Nothing:
If I would say nothing to Sam, Sam would not be aware of the critical situation that needs his attention. The consequences of not disclosing the information may be very adverse as company Y would collapse. Sam would go bankrupt, and further Sam may suit a case against me why I did not disclose the information in time. I am now the financial controller, so the responsibility of the collapse of Y may rest upon me, and I would be held responsible for the consequences that the employees have to face as a result of the collapse.
Tell Sam:
As for going with the responsibility I would have to tell everything to Sam. The consequences that would be the result of this action include rivalry between me and Rachael. Further the owner may put blame on me for the decline in the performance of Y. The whole situation is critical to handle as the whole of the scenario is rotating around me. I should remain ethical and go for my responsibility, but by gaining the confidence of others by describing the reasons of my actions.

 

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