*Question 6 Oliver is a qualified accountant who is employed by Zanger, an unquoted company that manufactures electronic components. Zanger operates from a single, large factory that is the largest employer in Contown. Oliver is assisting with the preparation of Zanger's annual report for the year ended 30 September 2017. The company has had a difficult year and it has sustained large losses that have pushed its gearing ratio close to the upper limit imposed by a debt covenant. If the debt covenant is breached then the bank will be entitled to foreclose on the loan, which will put Zanger out of business. Oliver has conducted an impairment review of the equipment in Zanger's factory. In his opinion, the equipment is impaired and an adjustment should be made. He reported his findings to Zanger's Finance Director, who congratulated him for his thoroughness, but then asked him to destroy all working papers relating to the impairment review and to delete any files on his laptop. The Finance Director said that the impairment adjustment would put Zanger in breach of its debt covenant and would cause the bank to put the company out of business The Finance Director reminded Oliver that the local economy in Corrtown relies on Zanger. Apart from those employed in Zanger's factory, many others work for small businesses that provide Zanger with goods and services. Local retailers depend on Zanger's employees to remain viable. Those who own their own homes will be unable to pay their mortgages and house prices will slump, creating massive financial difficulties. Required: (a) Evaluate the ethical dilemma faced by Oliver and advise him on 339 how he should respond to the Finance Director's request. (b) Critically analyse the assertion that it is often difficult for accountants to identify the public interest. (Association of International Accounts) *Question 2 Joe Withers is the chief financial officer for Withco plc responsible for negotiating bank loans. It has been the practice to obtain loans from a number of merchant banks. He has recently met Ben Billings who had been on the same undergraduate course some years earlier. They agree to meet for a game of squash and during the course of the evening Joe learns that Ben is the chief loans officer at The Swift Merchant Bank. During the next five years Joe negotiates all of the company's loan requirements through Swift, and Ben arranges for Joe to receive substantial allocations in initial public offerings. Over that period Joe has done quite well out of taking up allocations and selling them within a few days on the market. Required: Discuss the ethical issues. *Question 6 Oliver is a qualified accountant who is employed by Zanger, an unquoted company that manufactures electronic components. Zanger operates from a single, large factory that is the largest employer in Contown. Oliver is assisting with the preparation of Zanger's annual report for the year ended 30 September 2017. The company has had a difficult year and it has sustained large losses that have pushed its gearing ratio close to the upper limit imposed by a debt covenant. If the debt covenant is breached then the bank will be entitled to foreclose on the loan, which will put Zanger out of business. Oliver has conducted an impairment review of the equipment in Zanger's factory. In his opinion, the equipment is impaired and an adjustment should be made. He reported his findings to Zanger's Finance Director, who congratulated him for his thoroughness, but then asked him to destroy all working papers relating to the impairment review and to delete any files on his laptop. The Finance Director said that the impairment adjustment would put Zanger in breach of its debt covenant and would cause the bank to put the company out of business The Finance Director reminded Oliver that the local economy in Corrtown relies on Zanger. Apart from those employed in Zanger's factory, many others work for small businesses that provide Zanger with goods and services. Local retailers depend on Zanger's employees to remain viable. Those who own their own homes will be unable to pay their mortgages and house prices will slump, creating massive financial difficulties. Required: (a) Evaluate the ethical dilemma faced by Oliver and advise him on 339 how he should respond to the Finance Director's request. (b) Critically analyse the assertion that it is often difficult for accountants to identify the public interest. (Association of International Accounts) *Question 2 Joe Withers is the chief financial officer for Withco plc responsible for negotiating bank loans. It has been the practice to obtain loans from a number of merchant banks. He has recently met Ben Billings who had been on the same undergraduate course some years earlier. They agree to meet for a game of squash and during the course of the evening Joe learns that Ben is the chief loans officer at The Swift Merchant Bank. During the next five years Joe negotiates all of the company's loan requirements through Swift, and Ben arranges for Joe to receive substantial allocations in initial public offerings. Over that period Joe has done quite well out of taking up allocations and selling them within a few days on the market. Required: Discuss the ethical issues
