You have recently been appointed management accountant for a charitable company, and have been asked to prepare a grant claim. As you are new to the company, this is the first year you have prepared the claim. However, the company has been claiming the grant for a number of years.

When reviewing the detailed cost information, you find that some inappropriate expenditure was included in the past, which increased the amount of grant awarded. This incorrect approach was consistently applied to previous claims, and the external auditor signed off the claims without qualification. Your predecessor had a close working relationship with the auditor.

Your manager is also new to the organisation. He is a member of the same golf club as the external auditor, and you are concerned that they might have a close relationship which could prevent the issue being addressed objectively.

Requirement:

In relation to the scenario above:

1)Outline the relevant facts (What? Who? Where? When? How? What is the key information we need to know to help identify the issue/problem?)

2)Identify the affected parties/stakeholders

3)Highlight who should be involved in resolving the issue

4)Outline possible courses of action

5)Conclude on the best course of action