Ozzie Foods Ltd produces several varieties of muesli and chocolate bars. An action has been brought against the company by a customer who broke a tooth while eating a muesli bar sold by Ozzie Foods Ltd. The chief accountant of Ozzie Foods Ltd, Col Gates, prepared a draft of the financial statements, including a note disclosure about the lawsuit. However, the chief executive officer, Wil MacLean, argued that the lawsuit should not be reported as a contingent liability because Ozzie Foods Ltd might win the case, and any mention of this incident in the financial statements might encourage more lawsuits and potentially increase the company’s liability.

Required

a)Define the ethical problem including identification of relevant stakeholders.

b)Ethical review–Identify two ethical principles that are relevant to the problem and explain why they are relevant.

c)Consider options: -Describetwo different courses of action, (i) and (ii), that Col Gates could take.

d)Investigate potential ethical outcomes for each course of action identified in part (c). You should consider multiple stakeholders in addressing this component and evaluate the outcome in terms of the principles identified in part (b).

e)Decideon action: Conclude by stating which course of action you think Col Gates should take and explain why, with reference to the principles stated in (b).