Question 2 (6 marks - 600 words)

Your friend Sandy graduated as an accountant a couple of years ahead of you and is in the process of completing her professional year studies. Sandy confides in you that she has discovered that her accounting boss has been inflating the firms inventory figures in order that the firm stays within the banks loan covenant and maintain their access to overdraft finance. The senior accountant has assured Sandy that this is a short terrm solution whilst the company overcomes some short-term business hiccups. However, Sandy is aware that this false inflation of inventory value (which has the added impact of inflating profit) has happened at least twice before. Sandy fears that if she pushes the issue she will lose her job and has asked for your advice as a fellow accountant.

Required:

1. Provide advice to Sandy about how she should deal with this situation. Identify and define what form of ethical approach informs your advice to Sandy.
2. Sandy informs you that they are now a single parent of two children who is struggling financially with a large mortgage. Does this change your advice to Sandy? Explain why or why not.
3. Using the professional bodies process for dealing with ethical issues in business contained in APES 110 (https://apesb.org.au/standards-guidance/apes-110-code-of- ethics/), advise Sandy on what she should do.