Reference no: EM133145196

Case Analysis - Ethical Dilemma for CPAs in Business -

Mary Grace is the chief accountant of a young, successful and fast-growing company that had started trading with a handful of employees but now has a workforce of 150, while still remaining below the size of company requiring a statutory audit. Her husband is one of the directors of the company. She is aware that some purchases of goods manufactured by the company are authorized by production managers, and then processed outside the accounting system. The proceeds from these sales are used to fund the company's gift-giving activities with orphanages during Christmas.

1. What do you think are fundamental principles affected in the given situation?

2. What are the potential threats that might occur from the situation?

3. Recommend some safeguards to eliminate or reduce to an an acceptable level the threats identified.

4. What possible courses of action should Mary Grace take in the situation?

Reference: Code of Ethics for CPAs.