Ethical Issues and Financial Analysis Case Study †Free Samples

Question: Discuss About the Ethical Issues and Financial Analysis? Answer: Introducation Through this report, various case studies have been analyzed with reference to their ethical position, financial information and disclosures, ethical dilemmas and the review of an article mentioned in the Business review. The aim of the report is to confine the readers and the users with knowledge and meaning of the concept of ethics and finance. The report has been framed with the executive summary summarizing the start of the report and the major aim of preparing the report. Then the brief introduction has been given for whole of the report detailing the structure of the report. Then the first case study has been discussed with respect to the questions asked and it deals with the ethical and governance issues. The second case study has been discussed which deals with the financial analysis of the annual report of the company namely David Jones Limited. The third case study is dealt with the decision about whether to do or not do something as to whether the company shall engage the particular accounting firm or not and what are the requirements of getting the same selected. Then in the fourth case study the ethical issues have been discussed with auditing issues and scope of the work of audit committee and that last case study is the literature review of any article published in the Business Review Weekly. With these considerations, the report has been bifurcated in different sections and headings followed by the adequate and proper conclusion and recommendation. Etihics and Governance Each person shall follow some code of conducts either defined by the law or defined by the religious statutes or defined by the inner morality of the person dealing with many situations. If no person follows the ethics then he or she will face the difficulty of doing any kind of work in an effective and efficient manner. The Governance is related to the world which means that all the activities of individuals those working in the company or working in their day to day life shall be governed in the proper manner and it shall be so governed by the top management of the organization or the inherent code of conducts which has been provided by the relevant laws or statutes (Dandino, 2016). Thus, the concept of ethics and governance are inter related and have to be worked simultaneously. It is so said in the sense that if ethics are there without the governance system then no one will be ready to follow the ethics and in other sense if governance system was there but without ethics then the purpose of having the governance will be futile. Thus, ethics and governance needs to be worked simultaneously (Andrews, 2011 and Arjoon, 2016). In the given case, Vicky have to go home and have given her friend Becks to buy the accounting text book on her behalf and she has given $100 to him and said that keep the balance after returning from home. The market price of the text book is $85. After few days Becks went to the shop and finds that the book seller was engaged in selling the second hand book for $65 to the students. This second hand book is really in new frame and looks like it is the new one. By seeing this, he has purchase the accounting text book for $65 and thought that he will be able to gain $20 and giving the $15 back to his friend Vicky and Vicky would not find it possible to identify whether it is the second hand book or the new one. In respect of the above case study, the following have been answered: Stakeholders in the situation - Stakeholders are the persons who have the requisite interest in the matter in which they are dealing. For instance in case of the organizations stakeholders are the persons who have interest in the affairs of the organization like shareholders, financial institutions and other lenders, employees and government, etc. In the given case study stakeholders are Vicky and Beck. Vicky is regarded as the stakeholder in the sense that she has given the amount of $100 to her friend Becks in the view that he will purchase the best accounting text book for her which is available in the market at $85 and remaining $15 she will obtain from Becks after she returns from the home. Beck is regarded as the second stakeholder in this situation in the sense that the he has to purchase the accounting text book on the behalf of her friend and is liable to return the balance amount along with the accounting text book to her (Fontaine, 2016 and Philips, 2014). Involved Ethical Issues Ethical issues means that whether the ethics involved in the case study are positive in nature or negative in nature. As per the case study, the ethical issues are involved in the terms of finance, compliance and personnel. Ethics in the terms of the finance includes the manipulation with the available funds of the Vicky as the same has been given in the view that the accounting text book as bought will be new but opposite has been happened. Beck has knowingly bought second hand book in the urge of having the financial gain of $20 and hence manipulated the financial figures to Vicky. Ethics in terms of the compliance is involved in the sense that Beck has not complied with the defined stipulations of buying the new accounting text book and hence has violated the issues. Ethics in personnel includes the situation where Beck has not maintained the transparency and fairness of the transaction so entered. Our View If I would have been in the situation of Becks, then I would have purchased the books as per the requirement of Vicky and in case she finds herself okay with second hand book then I would have purchased that and have returned the remaining amount to her without any motive of cheating her or making any gain out of the work so done (Weisul, 2012). Financial Analysis The financial analysis of the company David Jones Limited has been made with reference to annual report of the company for the year ending 2013 in view of the following parameters: Main activities and operations - The company is registered and listed in Australia and is engaged in the business of up market departmental store since its inception. It is the subsidiary of Woolworths Holdings Limited which is also engaged in the business of departmental store and is one of the leading companies in Australia. David Jones limited was founded in the year 1838 in Australia by Mr David Jones thereafter it has been expanding since then. In today scenario the company has 43 stores in Australia. The business operations of the company have been bifurcated in the four segments namely fashion and beauty, lifestyle, home and food and electrical appliances. Each segment of the company provides various products ranging not only for the adults or teenager but also for the kid and children and even new born babies. They have the online shopping model where you can place the order and track it till the order is received. Also they have their different stores where everyone can go a nd buy the products as per the defined needs and expectations. They have also opened the financial model where the financing is also being given to their customers (David Jones Limited Official Website, 2013). Chief Executive Officer and Chief Financial Officer - As per the annual report of the company for the year ending 2013, Paul Zahra is the Chief Executive Officer of the company and Brad Soller is the Chief Financial Officer of the company (David Jones Limited Official Website, 2013). Important Financing and Investing Decision - As per the Notes to the accounts of the financial statements, the company has hedged its currency exposures by holding the derivative instruments. These derivatives include the futures, options and derivative contracts. The major investment decision that the company has taken is that to get itself merged into the Woolworths Holding Limited and in the forthcoming year ending 2014 the company has been merged into the Woolworths Holding Limited (David Jones Limited Official Website, 2013). Directors Declaration in relation to the Information in the Financial Statements Following declarations have been made by the directors in their report that That the directors are fully responsible for the preparation and management of the financial statements and the notes to the financial statements and the annexed schedules if any. That the financial statements so prepared shall be for the interest of the shareholders as well as the stakeholders That the financial information so contained shall be provided with full set of the financial statements to the external auditors of the company That the external auditors of the company are required to take an independent examination in accordance with the relevant accounting standards and auditing assurance standards duly standardized by the Australia accounting standards board. That the financial statements containing financial information are prepared in accordance with the International Financial Reporting Standards and the provisions of the Corporations Act 2001. That further declaration is made that the financial statements containing the financial information so prepared with the application of the going concern assumption and the material respect of prudence (David Jones Limited Official Website, 2013). Compliance with the ASXCGC In the annual report of the company it has been mentioned and declared under the heading Statement of Compliance that the company has complied with the Australian Securities Exchange Corporate Governance council, corporate governance principles and recommendation and the provisions of the Corporations Act 2001. Also the companies in its Statement of Corporate Governance have laid down the eight principles and have mentioned its compliances. Independent Auditors Report Following have been addressed in accordance with the independent auditors report- Companys audit firm is Ernst and Young Global Limited and audit partner was Graeme Mc Kenzie Statement of Auditors in relation to Accounting Information That the responsibility of the auditors are to express their opinion of the financial statements of the company in the form of auditor report That the company and its management is fully responsible for the preparation and management of the financial statements including the notes to accounts That the audit has been conducted with the Auditing Standards of Australia (David Jones Limited Official Website, 2013) Statement in relation to Independence That the audit opinion so formed on the financial statements is totally independent and is free from any bias or any error. That no contraventions have been observed in relation to auditor independence within the requirement of the Corporations Act 2001 (David Jones Limited Official Website, 2013). Money other than Audit fees received by the Auditor As per the note detailing the auditor remuneration, it has been observed that apart of $495500 received for the auditing and reviewing of the financial statements, the amount of $163568 have been received on account of Assurance related services and the taxation services (David Jones Limited Official Website, 2013). Decision Analysis List of factors for selecting the accounting firm: The accounting firm shall process all the bills, invoices, payment and receipts in the timely manner The firm shall have adequate staff which can fulfill the requirements of the company The firm shall have competent staff that shall be able to handle the accounts and financials of the company. That the accounting firm shall give the competitive rates. It shall not be too much low and shall not be too much higher. List of services for selecting the accounting firm: Daily maintenance of books of accounts Reviewing the bills and invoices Follow up with parties for making and receiving the payments Relationship with the banks Compliance with the requirements of the different and applicable laws for the time being in force. Reconciliation with the bank and parties accounts Ethical Dilemma As per the requirements of the Corporations Act 2001 along with Australia Prudential Ethical Standards 110, the management of the company, board of directors, is required for the preparation of the financial statements of the company and the auditors are required to express their opinion on the financial statements of the company by applying their judgment and full independence. Further the audit committee is responsible for ensuring that all the compliances as listed in acts or laws or any standards have been made and have been properly discussed and disclosed appropriately (Arthur, 2016 and Metzger, 2013). The chief executive officer of the company is not in the picture of ensuring the compliances as the same work have been entrusted to the audit committee. In the given case the member of the audit committee raised the question that the impact of financial crisis in the year 2009 has not been mentioned in the agenda to the meeting of the audit committee. The clarification that he has received from the other member is that the Chief Executive officer of the company has said that the same has not any type of effect and thus its not useful to introduce as the agenda and also the compliance audit is also not required to be done. If I would be in that situation, then it would have been discussed in the meeting of the audit committee and have properly laid down the duties and responsibilities that lies with the chief executive officer and the relevant instructions shall be made to do the compliance audit and make the report thereon. Critical Thinking Marketing is tool for a business to express about its products and services to its prospective client to have revenue by selling goods and providing services to these clients by the company. The marketing is done by marketing department of the company in the forms of slogans, packet design, involvement any celebrity and other social media activities. For example making a feedback call, writing a thank you mail to customers are some marketing tools commonly used by the company now a days. The marketing is depend on four P elements which are known as Four Ps of marketing that are Price, Promotion, Product and Place. Before planning of marketing strategy by marketing department these factors are always taken into account to get good returns from the marketing. Marketing Strategy in Recession In an economy, when the economy is growing at a good pace, the quality products and services provided by the company are their marketing tools for attracting the customers and main focus of the companies are to have increased volume of revenue in addition to reduced expenditure on marketing. But in case when economy is going towards recession, every company and its management is getting concern about the revenue to be earned and then the management put pressure on the marketing division to identify new marketing strategy from which they can attract customers even if the purchasing power of the customer is reducing. The Finance division managers generally do non-sense things at the time of pressure on them in recession. This involves firing of employees at lower levels to reduce the cost and increase the margins, new products and services are initiated in the markets, cutting the costs related to marketing without knowing wants and requirements of the customers present in market at the time of recession. Most analysist says that the best time for doing the marketing is the recession time. In the recession time revenue is dropping and if the good marketing strategy applies at the time with full focused to gather the customers attention on the products and services, the company can do wonders. Following are the things which require to be done at the time recession by the company:- If the company has monopoly in the market, then only company should launch new product in the market to get the attention of the customers. And if the company has no monopoly then the company should focus on its key bran product and services which are already in the market and liked by the customers. For example, in case of Samsung, during recession of 2010 and 2011, the company shifted the focus to its galaxy brand and able to sustain in the market. The advertisements in recession times should be more attractive, lucrative, and creative and sometimes includes funny things to attraction the attention of customers in down time. Taking a feedback in bad times plays a major key role at the time of recession in marketing. People have a tendency of not taking feedback at the time of their low period but feedback at this time is very necessary to know whether there is any positive things in the negative feedback can be extracted. And if this could able to do by manager then company can use that positive point and can do miracles. Thus, in order to conclude, the bad time is good time for creating and establishing the exiting brand to deeper into the market and in the minds of customers. Conclusion The report has laid down different cases study and their analysis. In the first case study, it is observed that the act of Beck is unethical. In the second case study, the annual report of the company has been analyzed. Third case study has detailed the factors required from an accounting firm and requirements to appoint accounting firm. Fourth case study has described the responsibility of audit committee and Last case study has reviewed the marketing strategy. Thus, its recommended to follow the guidelines as prescribed and follow ethics in any kind of work. References Andrews K., (2011), Ethics in Practice : Managing the Moral Corporation, Harward Business Review School Press. Arjoon S. , J. Gopal, (2016), Ethical Orientation for Future Managers : The Case of Trinidad, Social and Economic Studies, pages 98-114. Arthur, (2016), Whats wrong with Tread way commission report?, Journal of Business Ethics, pages 183-193. Dandino P. (2016), Corporate Governance : Something for everyone, Franchising World, pages 40-41. David Jones Limited Official Website, (2013), Annual Report available on https://www.davidjones.com.au/Jones accessed on 07/05/2017 Fontaine C (2016), The Stakeholder Theory available on https://www.martonomily.com/sites/default/files/attach/Stakeholders%20theory.pdf accessed on 07/05/2017 Metzger M (2003) The Organization of Ethics and Ethics of Organization : The case for Expanded Organizational Ethics Audits Business Ethics Quarterly, pages 27-43. Phillips R., (2014), Some key questions about Stakeholder Theory, IVEY Business Journal . Weisul K., (2012), You mean cheating is wrong? Business Week Iss