Question

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase.

1. What are Harriet’s ethical responsibilities, if any, with respect to the information she has learned through her duties as an accountant for New World Pharmaceuticals?
2. What are the implications of her planned purchase of New World shares?

Answer 1

Ans; Accountants are one of the most crucial and important part of any organization. They hold the internal as well as the external information of the client and their business. Disclosure of this kind of informations to any outside third party would lead to the downfall of the company.. Ethical responsibility of an accountant requires him to ensure full transparency and provide correct financial reporting.

a) In this case, Harriet Moore,the accountant for New World Pharmaceuticals is in the verge of buying shares of the company in order to get benefit from it which is totally unethical in an accounting profession. Her ethical responsibility should have been working unbiased for the betterment of the company and its shareholders, providing with true and fair value of the financial reports to the company's shareholders and not getting indulged by herself for any personal gain.

b) By this planned purchase of New World shares, Harriet Moore is doing an unlawful act by taking undue advantage of her position in the company thus leading to which their will be consequences in the near future. The shareholder's interest will drop down as they will feel being cheated. Thus this will have an adverse effect ultimately in the company's stock market.