Executive Summary

This case study seek to provide an appropriate action between the given alternatives and
thereby decision shall be made.

Our case study aims to determine ethical decisions that a professional accountant should do
especially in times of turbulence like weighing circumstances as to " what you on ought to do"
or " what will you do". It covers familiarization about professional accountant code of ethics as
to how an accountant anchored his conduct. In real life, working with ethical issues concerns a
lot to the extent that it creates confusion between what alternatives to choose, at that edge it
is significant to consider possible consequences that subsequently be determine on how it
manage to affect the overall interest of the parties involved.

The case is about the usual scenario that may probably encounter by the professional
accountants, it is about his commitment to the public interest or his responsibility toward the
entity he worked with. Since he was asked to modify the latest financial statements so that
Pearl of the Orient may looks favorable to the bank so the in line credit will be approved
enabling the company to have its fund to further provide its known services.

RELEVANT FACTS

Matt is a licensed CPA, controller of the Pearl of the Orient Health Care. The company provides
high quality of health care services. Due to nonrenewal of some contract between the company
and agencies such National and Local Government and State Colleges and Universities, the
circumstances of reducing work capital may likely to occur. The company has a pending credit
with a Local Bank amounted to ₱ 5,000,000.00 but then having a little hope of being able to
pay. Bank usually reviewed company's recent financial statements twice a year and the review
will be next week. Given that the recent financial statements are not sufficient to meet bank
satisfactory, Ms. Yolanda Gomez, the Chief Financial Officer tells Matt to have some
modifications in their financial statements so it will entail that it is favorable because without
due modifications the in line credit would be cancelled that gradually results to liquidity crisis
and making it unable for the company to remain going concern. Since financial audit is 6 weeks
away any modifications can be reversed upon the receiving the grant worth ₱ 7,500,000.00.

ETHICAL ISSUES

Matt is in trouble since he was asked to modify the financial statements so that the Pearl of the
Orient looks favorable to the bank so credit in line will be approved enabling the company to
have a fund to further provides its services. Given that due to some economic dilemma such as
widespread of Covid19 Matt really needs a job to deal with their daily sustenance.

WHO ARE THE AFFECTED BY THE OUTCOME OF THE DILEMMA

Matt

 He was being asked to change the recent financial statements

 He may be fired on his job
 He will violates his responsibility to the general public as mandated by the Professional
Accountants Code of Ethics
 He was held to be civilly and criminally liable

Pearl of the Orient Health Care

 The entity can no longer available the in line credit

 This will result to liquidity crisis
 They are about to observe liquidating concern
 They can no longer enjoyed grants given

Ms. Yolanda Gomez

 She may lose her job

 She may also be held liable for fraud

Customers ( Clients)
  They can no longer received health care services offered by the Pearl of the Orient
Health Care

Matt's Family

 Since Alyssa Matt's wife have been out of work, they are in financial instability leading to
unsatisfactory of daily sustenance

ALTERNATIVES AVAILABLE

 Refuse to modify the recent financial statements

 Perform the said modifications to approve the in line credit
 File resignation letter

CONSEQUENCES OF ALTERNATIVES

 He commits himself to his responsibility toward general public interest and being in line
to his integrity
 He may lose his job
 He and his wife may be in trouble
 The entity can create a bad reputation regarding their responsibility to provide accurate
quantitative reports
 The company can still manage to provide high quality health care services
 He may receive any incentives due to continuance of the operations

APPROPRIATE ACTION

As an accountant one must commit his dedication to serve public interest. He may lose his job
and put his family into trouble yet knowing the results of such fraudulent activity may put his
name into non reputation attributes. As an accountant it is not just a priveledge to have a client
but one should also reminds himself that in every priveledges there is also an anchored
responsibility. Responsibility toward the oath regarding objectivity and integrity attached to the
title being enjoyed. Considering the subsequent consequences, in a short run he may be at
financial trouble but in a long run he put his name in a good reputation...

REFERENCES

“A distinguishing mark of the accountancy profession is its acceptance of the responsibility to

act in the public interest. Therefore, a professional accountant’s responsibility is not exclusively
to satisfy the needs of an individual client or employer. Professional Behavior thereby refers to
comply with relevant laws and regulations and avoid any action that discredits the profession.
When a professional accountant encounters unusual circumstances in which the
application of a specific requirement of the Code would result in a disproportionate
outcome or an outcome that may not be in the public interest, it is recommended
that the professional accountant consult with a member body or the relevant regulator.”( Code
of Ethics for Professional Accountants)

“Like other professionals such as physicians and architects, auditors are liable both civilly and
criminally. Civilly, an auditor can be found liable either under the common law or a statutory
law liability. Common law liability arises from negligence, breach of contract, and fraud.
Statutory law liability is the obligation that comes from a certain statute or a law which is
applied to society. The scope of both common law liability and statutory liability has been
expanded to include certain third parties, mainly the foreseen or foreseeable users of audited
financial statements. Also, a lawsuit in a state court provides greater protection than the one
brought before the federal court.” ( The International Corporate Governance System pp 264-
292)