Charles is at a neighbourhood Christmas party with several of his flatmates. Over a few beers, Charles gets into a conversation with a neighbour, William, about mutual acquaintances. Charles is a senior auditor with a large accounting firm (although he tells William that he is a partner at the firm) and William works for a large bank. During the conversation Charles and William discover that they have both had professional dealings with a particular family-owned manufacturing company. William reveals that the companys line of credit is about to be cancelled because of some irregularities with the security. Charles is concerned to hear this news because he has just participated in the companys financial report audit and there was no indication of any problems with its borrowings. However, as Charles explains to William, he has his doubts about the patriarch of the family, whom Charles believes is having an affair with his personal assistant. Charles also tells William that the family has quietly increased its shareholdings in a listed company that supplies components to the family manufacturing company. The components manufacturing company is about to announce to the share market that it has just won a very large, and very profitable, contract with a Chinese company.

Discuss the ethical principles that are potentially breached by Charless behaviour at the party and explain how the principles are breached.