CASE STUDY

THE ASHLEY COPPER COMPANY

Ashley Copper Company is based in a disused copper mine

situated in an economically depressed area. The mine has been

reopened as a museum and tourist attraction. The income from

the business is generated from ticket sales to visitors for a ride

down the shaft in a lift cage, for a trolley cart rail journey into the

old copper mine and for a guided tour. The shop, situated

underground as part of the museum, sells copper based products

and other souvenirs which provides an additional source of

income.

Ali is a qualified accountant and a member of ACCA which has an

ethics Technical Advisory Service as part of its support to

members. Ali had been unemployed for a short period before

being appointed over 12 months ago as the financial accountant.

Jay, the assistant manager, is very materialistic. He loves fast

cars and has previously said to Ali that he would buy one if only he

could save up enough money. Jay works at the museum escorting

the customers to the mine shaft entrance, collecting their tickets

as they enter the lift cage and acting as their tour guide

underground.

Sam, is Jay's mother and the owner of Ashley Copper Company.

Sam is a very close friend of All's father. Sam owns 100% of the

shares in the company.

Soon after she was appointed, Ali, who reports directly to Sam,
had set up new accounting and internal control systems for the

business.

Charlie sells all the tickets from a dispensing machine in the sales

office using a colour coded roll for each day with each roll of

tickets numbered in sequence for that day. Charlie collects takings

from customers in an electronic cash register with an integrated

credit / debit card terminal.

At the end of each day, after Charlie has finished work, Jay unlocks

the cash register, reconciles the physical cash and cheques

received with the cash register (till roll) record, and finally

reconciles all daily sales takings (including credit / debit card

sales) with all the tickets he has collected from customers. He

then completes a sales reconciliation schedule recording cash,

cheques and credit / debit card sales itemised for each day before

putting the cash, cheques, and all tickets collected from cheques and credit / debit card sales Itemised
for each day before

putting the cash, cheques, and all tickets collected from

customers into the office safe. Jay then removes and destroys

what remains of the ticket roll from the dispensing machine,

replacing it with a new colour coded roll of tickets ready for the

next day. He also removes and disposes of the used cash register

roll for that day, replacing it with a new blank roll.

All cash and cheques from the safe are taken by Jay to the bank at

the end of each week. Finally, the bank paying-in slip counterfoil,

along with the sales reconciliation schedule containing a daily

record of the number of tickets sold for the week (by sales type)

and the associated tickets for each day, are then submitted on a

weekly basis to Ali for recording in the books of account.

The shop is solely managed by Sam. Sam orders the inventory,

collects and counts the takings and deposits these at the bank on

a weekly basis, submitting to Ali all the bank paying-in slips, the

associated cash register records, all purchase invoices and

expense receipts - all on a monthly basis.

In the past two years, during the 'peak' period, the number of

visitors per day has consistently been about three times higher

than the average for the 'non-peak' period and sales have

remained broadly static each year. Over the same two years this

pattern of sales has also been reflected at the shop, indicating that

shop revenues are largely dependent on visitor numbers. Shop

sales have historically also accounted for about 40% of the total

turnover of Ashley Copper Company annually.

At the end of the last financial year, Ali was producing the draft

financial statements and noticed that shop takings had increased

by approximately 50% and the gross profit margin had also

increased quite significantly from the previous period, with the

greater percentage increase being in the 'off-peak' period.

Shop sales had accounted for approximately 55% of the total sales

for the year, while over the same period, ticket sales were

consistently about 20% down on the previous year, in both the

"peak' and 'off-peak' periods. Ali had also noticed that the business
bank balance was 10% higher at the end of the year than at the

end of the previous year, despite costs on both sides of the

business remaining stable over time and there being no other

deposits, bank transfers or any significant change in the dividends

paid to Sam in the current year.

Ali finds these results rather surprising and has also noticed (but

had not mentioned this to Sam) that Jay has recently bought a

brand new Juxury sports car. She suspected that Jay may have

been defrauding the company.

What should Ali do now?

Using the framework for ethical thinking discussed in Sections 4

and 6, it is now time to begin a process to identify the options or

alternatives available to Ali.

When you have completed each step you will be able to view the

correct answers. You should note that on viewing the correct

answers you will be unable to amend the answers you have

already given.

STEP 1 - What are the relevant facts?

Type at least five key facts that Ali would need to be aware of

when deciding her options:

STEP 2 - What are the ethical issues involved?

List at least three ethical issues,dilemmas or questions that you believe Ali may face in this situation
STEP 3 - Which fundamental professional principles are being threatened?

List at least 3 threats to fundamental professional principles that Ali could face in this situation.

STEP 4 - Do internal procedures exits to mitigate against any of the above threats?

Explain how Ali could use any internal procedures or service to help her in this situation

STEP 5 - List all alternative course of action facing Ali.

List all the potential courses of action available to Ali in this case that you can think of.

(Please note that you may identify alternatives that might not be acceptable or advisable in professional
or personal ethical terms within your list)