a) Analysis of Mr. John’s Actions:

i) The Model Code:

• The Model Code prohibits directors from dealing in shares during a “closed period,” which is the period before the announcement of the company’s interim or final financial results. Mr. John violated this rule by selling his shares during the closed period.
• Additionally, directors are not allowed to deal in shares when they have access to price-sensitive information. Mr. John infringed upon this rule as he had insider knowledge of the company’s financial condition before selling his shares.
• Directors must also obtain prior permission from the chairman before dealing in the company’s shares at any other time. Mr. John failed to seek such permission before selling his shares

ii) Critical Theory:

• Critical Theory argues that accounting is not objective or value-free; it has historically been a tool for government and business leaders to maintain control. Mr. John’s actions reflect this concept, as he used insider information for personal gain while other shareholders were unaware.
• The theory also states that accounting is influenced by social and cultural contexts, and different accountants may have varying perspectives. In this situation, Mr. John might have justified his actions as aligning with his interest, without considering the broader ethical implications

iii) Moral Development of Accountants:

• Step 1: Recognition of the moral issue: Mr. John failed to recognize the ethical dilemma in using insider information to benefit himself.
• Step 2: Consistency with a morally correct course of action: Mr. John chose an action inconsistent with ethical conduct, as he prioritized personal gain.
• Step 3: Prioritization of moral issues over self-interest: Mr. John did not prioritize ethical considerations over his financial interests.
• Step 4: Moral strength to implement the decision: Mr. John lacked the moral strength to refrain from acting on insider knowledge

b) Fundamental Ethical Principles:

Professional accountants are expected to comply with the following ethical principles:

1. Integrity: Accountants should be honest and straightforward in all professional and business relationships. Mr. John’s actions lacked integrity as he used insider information to gain an unfair advantage.
2. Objectivity: Accountants must not allow bias, conflict of interest, or undue influence to override their professional or business judgment. Mr. John allowed his personal interest to influence his decision, compromising objectivity.
3. Professional Competence and Due Care: Accountants must maintain professional knowledge and skill at the required level to ensure their clients or employers receive competent services. While Mr. John may have acted competently in executing the transaction, his lack of due care for ethical standards violates this principle.
4. Confidentiality: Accountants should respect the confidentiality of information acquired during their work. Although Mr. John did not breach confidentiality in a traditional sense, his use of unpublished financial information to his advantage can be considered an ethical violation of this principle.
5. Professional Behavior: Accountants should comply with relevant laws and regulations and avoid actions that discredit the profession. Mr. John’s insider trading brought disrepute to both the company and the profession as a whole​