Nadiy Frama immigrated to Canada from North Africa 10 years ago. He has a degree in accounting from a French university, and he has held vanous positions in investment firms. Three years ago, he joined Tortoise & Hare Planners (T&H) as a financial planner. T&H is a small firm that mainly serves new immigrants to Canada It operates on a commission basis rather than on a clearly defined fee-for-service basis. Commissions generally come in the form of fees deducted annually from mutual funds that clients have purchased Occasionally, a mutual fund will offer a bonus fee to promote certain funds. This month, Exponential Canadian Funds is offering a bonus to dealers for investments in its Super Growth Resource Fund. Last year, Nadiy asked his boss, Emily Renault, whether T&H has a policy on disclosure of bonus fees to clients. Emily responded that planners should provide this information if the client asks about fees, but most clients don't bring it up. She said that if clients wanted lower-cost index investment funds, they would ask about them. Emily then noted that Exponential Canadian has a reasonably good record comparable to many other funds that T&H planners are suggesting to clients. Nadiy agrees with Emily's assessment of Exponential Canadian, but he is still troubled by T&H's implicit disclosure policy to tell only if asked. He also wonders about the effect of bonus fees on financial planners' recommendations At the time, Nadiy decided not to worry about the issue. However, last month, T&H was sold to Egon Zabar, a pillar of the local multicultural community. Egon will act as CEO of what will now be known as EZ Investments Ltd. Egon has just met with the staff and told them that he is open to new ideas about how to better serve the diverse multicultural community that is their client base. Nadjy decides this is the right moment to raise his concerns about bonus fees. He points out that many of their clients have limited English language skills and are also shy about asking questions. Nadjy says, "They trust us to do the right thing to meet their needs. "Unsurprisingly, Emily disagrees with Nadiy and defends the current policy with respect to investment fees She says that making changes to the policy might well weaken clients' faith in the investment firm. She also says that most of the sales staff are used to working with this arrangement and have good relations with contacts in the mutual fund industry Egon says that this is just the sort of vigorous discussion of the firm's objectives and methods that he wanted to promote. He asks Emily and Nadiy to send him succinct statements of their respective positions for his consideration Nadiy is your good friend. He asks you for help in responding to Egon Required: Assess the following using Accounting Case Analysis Method: 1. Who are the key stakeholders in this situation and how are they affected? (8 marks) 2. What is accountability and explain accountability in this situation. (4 marks) 3. What are the pros and cons of EZ Investments for the following two options for its disclosure policy on investment fees: (8 marks) a. Continue to not disclose the fees b. Change the policy and disclose the fees Nadiy Frama immigrated to Canada from North Africa 10 years ago. He has a degree in accounting from a French university, and he has held vanous positions in investment firms. Three years ago, he joined Tortoise & Hare Planners (T&H) as a financial planner. T&H is a small firm that mainly serves new immigrants to Canada It operates on a commission basis rather than on a clearly defined fee-for-service basis. Commissions generally come in the form of fees deducted annually from mutual funds that clients have purchased Occasionally, a mutual fund will offer a bonus fee to promote certain funds. This month, Exponential Canadian Funds is offering a bonus to dealers for investments in its Super Growth Resource Fund. Last year, Nadiy asked his boss, Emily Renault, whether T&H has a policy on disclosure of bonus fees to clients. Emily responded that planners should provide this information if the client asks about fees, but most clients don't bring it up. She said that if clients wanted lower-cost index investment funds, they would ask about them. Emily then noted that Exponential Canadian has a reasonably good record comparable to many other funds that T&H planners are suggesting to clients. Nadiy agrees with Emily's assessment of Exponential Canadian, but he is still troubled by T&H's implicit disclosure policy to tell only if asked. He also wonders about the effect of bonus fees on financial planners' recommendations At the time, Nadiy decided not to worry about the issue. However, last month, T&H was sold to Egon Zabar, a pillar of the local multicultural community. Egon will act as CEO of what will now be known as EZ Investments Ltd. Egon has just met with the staff and told them that he is open to new ideas about how to better serve the diverse multicultural community that is their client base. Nadjy decides this is the right moment to raise his concerns about bonus fees. He points out that many of their clients have limited English language skills and are also shy about asking questions. Nadjy says, "They trust us to do the right thing to meet their needs. "Unsurprisingly, Emily disagrees with Nadiy and defends the current policy with respect to investment fees She says that making changes to the policy might well weaken clients' faith in the investment firm. She also says that most of the sales staff are used to working with this arrangement and have good relations with contacts in the mutual fund industry Egon says that this is just the sort of vigorous discussion of the firm's objectives and methods that he wanted to promote. He asks Emily and Nadiy to send him succinct statements of their respective positions for his consideration Nadiy is your good friend. He asks you for help in responding to Egon Required: Assess the following using Accounting Case Analysis Method: 1. Who are the key stakeholders in this situation and how are they affected? (8 marks) 2. What is accountability and explain accountability in this situation. (4 marks) 3. What are the pros and cons of EZ Investments for the following two options for its disclosure policy on investment fees: (8 marks) a. Continue to not disclose the fees b. Change the policy and disclose the fees