Noreen Parke has been working at Tony Young & Associates for 3 years. Noreen and her husband, Tom, are both interested in environmental issues and have participated in community work concerning the environment. During a pharmaceutical company's annual audit for the financial year ended 30 June 2015, Noreen notices the company had recently changed its contractor for waste management to Dumpound Ltd. Noreen happens to know, through her community activities, that Dumpound is being investigated by the local council for the level of toxic waste at one of its sites.

The waste management contract between Dumpound and the pharmaceutical company does not specify damages and has not been signed by Dumpound. The contract is for a substantial amount and is valid for 3 years, and Noreen is concerned about the implications. The local council carries out strict inspections and imposes heavy fines for toxic dumping.

Noreen raises the issue with Tony, the partner in charge of the audit. ‘This is reality, Noreen,’ Tony says. ‘As far as I am concerned, we are responsible for the correctness of its financial report, and nothing else. Besides, you do not have the qualifications to judge whether a company is a good corporate citizen or not. We are not concerned with the business management.’ Noreen is told to mind her audit without raising any fuss.

Required

a. Explain the ethical issues involved here.

b. Recommend a course of action for Noreen.