PROBLEM NUMBER 2

1. While HHP faces possible legal actions if it decides without considering the crucial
information, the controller could lose his position as the vice president of manufacturing or his
job, and he places the CFO at the risk of losing his professional certification. The CMA Code of
for Professional Accountants requires all professional accountants to comply with five
fundamental principles, which include, integrity, objectivity, competence and due diligence,
confidentiality, and credibility. If the controller did not apprise the CEO and CFO of the pre-
existing situation, the CFO’s work will appear incredible to the external auditor as he would not
provide all relevant information in his financial reports and analysis. Moreover, as a beneficiary
of the inventory and purchase commitment, he would also appear to lack integrity due to the
existing conflict of interest and his reports and analysis would not be objective.

2. Competence and due diligence and confidentiality are also among the fundamental principles
spelt out by the CMA Code of Professional Accountants. If she believes the controller has been
unethical and not apprised the CFO and CEO, Marian Nevins should take the responsibility of
informing them about the inventory and purchase commitment problems. Besides enhancing her
knowledge and abilities to consistently fulfill her responsibilities properly, Marian, also has the
responsibility of making accurate and timely recommendations as well as recognizing and
helping in risk management. However, she should not mention the problem to the external
auditor before being advised on her next cause of action by her bosses. The principle of
confidentiality requires Marian to respect the confidentiality of all information gained in the
cause of her professional and business relationship with HHP.

3. Based on the CMA code of ethics, HHP has the responsibility of honoring its commitment to
the suppliers, to its investors, and most importantly to the patients served. The decision made by
the company should absorb it from any legal impunities to either of its stakeholders. As a result,
should get into negotiations with the suppliers to discuss a much better solution that will not
result in legal issues, poor services to patients, or any substantial losses to investors.