– ASA (Australian Sealants and Adhesives) are major distributors of a vast variety of sealants
and adhesives which are purchased by builders, 'do- it -yourself' handyman and hardware
retailers and are utilised in performing their job and running their business as ASA is a
supplier to them.
– Turnover last year was $50 million and after-tax profit was $4 million.
– There has been success in the company throughout the year due to the release of their new
adhesive product and as a result, will exceed the profit forecast revealed in its prospectus.
– $2 million were invested in the production of the new product called FIX by ASA which
was launched through an advertisement campaign costing $1 million.
– FIX sales in the year ended 30 June, 2015 were $6 million.
– Due to no scientific analysis being conducted, there is uncertainty by the R&D Manager of
ASA on whether the products chemical formulation complies with the safety standards set
by the Federal Government.
Consumers: Builders, 'Do- it- yourself' handyman and major hardware retailers
Government authorities: Federal Government
Investors: Australian Stock Exchange (ASX)
Board of directors, specifically Finance directors such as Sam Chew
Auditor/ Advisor (Julie)
Ethical principle Discussion (how the principle applies to the
Integrity Sam is not being straightforward to Julie as he is
concealing information about the company in
regards to the development and promotion of
FIX. For instance, ASA are not being honest on
whether the product is safe and meets the safety
standards and requirements set by the Federal
Government and also they are using short cuts in
launching their product that weren't made aware
to Julie. Therefore, there will be a breach of
integrity if Mike keeps silent about the short
Objectivity Mike's judgement that there are shortcuts in the
launching of FIX is being influenced by Sam
whom is attempting to convince him that there
aren't any problems and alter his opinion
regarding the steps taken to promote the product.
This can be defined as members not
compromising their business decisions due to
bias, conflict of interest or the undue influence
of others as stated in section 110.1 (Accounting
Professional and Ethical Standards Board
Professional Competence and Due Care Their is a lack of diligence and due care as the
product hasn't been tested and scientifically
analysed to ensure that it doesn't pose any harm
to its consumers. Also, there is no research...