ANNEXURE I: FORMATIVE ASSESSMENT 2 (39 marks) QUESTION 4 You are an Internal Auditor working for XYZ Manufacturing Company, a leading manufacturer of automotive components based in Johannesburg, South Africa. Your company has recently received a large government contract to supply parts for a major infrastructure project. The contract is worth R50 million and requires the procurement department to source materials and services from various suppliers. However, you have noticed some irregularities in the procurement process. In particular, the Procurement Manager, John Smith, has been awarding contracts to certain suppliers without following proper bidding procedures. You have come across invoices from these suppliers that seem inflated, and there are indications of kickbacks being received by John Smith. The total amount involved in these suspicious transactions is approximately R2 million. REQUIRED: 4.1 Identify and analyse the relevant personal, business, and/or professional ethical dilemmas apparent in the scenario, considering the South African context of ethical standards, codes of conduct, and regulatory requirements in auditing. (6 marks) 4.2 Identify and describe the ethical values contradicted by the ethical dilemmas, such as integrity, honesty, fairness, and transparency, and evaluate the impact of the ethical dilemmas on these ethical values within the context of the manufacturing industry. (4 marks) 1.3 Identify the stakeholders affected by the ethical dilemmas, including the company, employees, suppliers, customers, and regulatory authorities, and explain how they are affected by the fraudulent activities in the procurement department. (8 marks) 4.4 Apply an ethics-based reasoning process to solve the ethical dilemmas that have been identified, considering the appropriate steps to investigate the suspected fraudulent activities, gather evidence, and make recommendations for corrective actions. (8 marks) 4.5 Analyse all courses of action and the consequences of each, such as disciplinary action, legal implications, reputational damage, and financial losses, for engaging in fraudulent behavior within the organisation. (5 marks) 4.6 Discuss the importance of reporting ethics-related issues to higher levels of management, legal or regulatory authorities, or others when appropriate, and explain the potential impact of such reporting on the company, employees, stakeholders, and the broader business environment