You and your wife have recently moved to a remote coastal town in order to further your wifes career. You have found employment as financial accountant to a local private company. The companys operations are all related to tourism, and it has, as its principal asset, a large Victorian hotel. The company is owned by the two directors a husband and wife who are actively engaged in the day-to-day running of the business. You get on well with the directors and staff, and the directors of the company are clearly popular and well respected in the local community. You are still within your probationary period of employment. The company had faced some serious cash flow difficulties shortly before you took up your post. However, a remortgaging arrangement has, apparently, eased the financial pressure. The managing director comes to you with a company cheque for 4,000, which he has already signed. He asks for your counter-signature, explaining that it is the deposit for the design work and furnishings for some of the hotel bedrooms. There is a formal invoice from a design studio, but you are surprised as you were not aware that any such outlays had been planned. Nevertheless, given the explanation and the supporting invoice, you counter-sign the cheque. Out of curiosity, you decide to conduct some research into the design studio. This indicates that it is a company that had, in the past, a high level of indebtedness. You note that the company secretary appears to be the daughter of the directors for whom you work. Two days later, the managing director comes to you with another cheque, this time for 25,000, again needing only your counter-signature. There is a supporting invoice from the same design studio. You are hesitant, and the managing director explains that he is only asking you to counter-sign the cheque because his wife is not in the office. He says that it is important to submit the cheque promptly so that it may be banked before 30 April. You ask why there is such urgency, particularly as there is no evidence of any design work having started. The managing director laughs and replies that the money should be back in the hotel bank account by the middle of summer. He explains that the cheques are needed urgently to settle outstanding directors loan accounts at the design studio, as its year end is approaching. Once the year end has passed, the money should be returned to the hotel company and a supporting credit note received. Key fundamental principles Integrity: A) How can you act honestly with regard to the operations and accounting function of your employer?

You must encourage fair dealing and truthfulness. Objectivity: B) You must strive to find a persuasive solution to this ethical dilemma, although there are significant pressures upon you to accept an arrangement that involves blatant dishonesty.