Question

Alfred Jarmon , professional accountant, does the bookkeeping, prepares the tax returns and provides management services for Luner  L td .When providing these services it frequently advises its clients to buy its computer equipment from Computer Services Ltd. Computer Services has agreed to pay Jarmon a 10% commission if the referral leads to sales for Computer Services.You are asked to state whether there has been a violation of the Accountants Code of Ethics and state which ethical principle has been violated and  briefly providing a reason(s) for your opinion

Answer 1

YES. THERE HAS BEEN A VIOLATION OF THE ACCOUNTANTS CODE OF ETHICS.

A PROFESSIONAL ACCOUNTANT IS REQUIRED TO COMPLY WITH THE FUNDAMENTAL PRINCIPLES :

1) INTEGRITY

2) OBJECTIVITY

3) PROFESSIONAL COMPETENCE AND DUE CARE

4) CONFIDENTIALITY

5) PROFESSIONAL BEHAVIOR

IN CASE OF ALFRED JARMON, HE VIOLATED THE FUNDAMENTAL PRINCIPLES OF INTEGRITY, OBJECTIVITY.

A PROFESSIONAL ACCOUNTANT SHOULD BE STRAIGHT FORWARD AND HONEST IN ALL PROFESSIONAL AND BUSINESS RELATIONS. MOREOVER HE/SHE SHOULD NOT ALLOW BIAS/ CONFLICT OF INTEREST OR UNDUE INFLUENCE OF OTHERS TO OVERRIDE HIS/HER PROFESSIONAL JUDGEMENT.

COMPLIANCE WITH THE FUNDAMENTAL PRINCIPLES MAY BE POTENTIALLY THREATENED BY A VARIETY OF CIRCUMSTANCES/ THREATS LIKE SELF INTEREST THREATS, SELF REVIEW THREAT, FAMILIARITY THREATS ETC. IN THIS SPECIFIC CASE WE CAN LINK THE CASE OF SELF INTEREST THREAT IN ASSOCIATION WITH MR.ALFRED.

SELF INTEREST THREAT INCLUDE FINANCIAL INTEREST CASE WHICH CAN BE ASSOCIATED WITH THE PRESENT CASE.

A PROFESSIONAL ACCOUNTANT IN PUBLIC PRACTICE MAY RECEIVE A COMMISSION FROM THIRD PARTY IN CONNECTION WITH THE SALE OR SERVICE OF GOODS TO A CLIENT. ACCEPTING SUCH COMMISSION MAY GIVE RISE TO SELF INTEREST THREATS TO OBJECTIVITY AND PROFESSIONAL COMPETENCE AND DUE CARE.

MOREOVER HE IS NOT A COMMISSION AGENT RATHER HE IS A PROFESSIONAL WHOSE DUTY IS TO DELIVER QUALITY SERVICES TO HIS CLIENT AS PRESCRIBED BY THE LAW IN FORCE.