- 20 Marks
SCS – L3 – Q17 – Professional practice and codes of ethics
Identify three situations at NTM conflicting with IFAC's Code of Ethics.
Question
At its recent Annual General Meeting, management of NTM was highly criticized for two major scandals that occurred in the organization during the year. In one case, newspapers reported that the management of the company connived with officials at the port to undervalue imports in order to pay lower taxes. In the other case, it was reported that the accountant leaked information to his friend who was bidding for a contract in the company. The Board Chairman, who is also the Chief Executive Officer of the company apologized for these incidents but did not disclose that the company had been sued in respect of the first case. He went on to promise the shareholders that the fortunes of the company would change dramatically by the end of the new year as the company was going to start exporting its products to Europe within the next few weeks.
Required:
(a) Identify and explain THREE situations that are in conflict with the International Federation of Accountants (IFAC)’s Code of Ethics.
(b) Explain FOUR disadvantages of the CEO acting also as the Chairman of the Board.
(c) Identify FOUR principal duties of a Board of Directors.
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