A sole practitioner accountant provided services to Company A for 3 years, including preparing financial statements and tax compliance work. When the contract ended, the accountant helped another sole practitioner for 2 months due to a health issue. One of the clients of the incapacitated practitioner was Company B, an electrical goods shop. Company B informed the accountant of their plans to make an offer on the same small hardware business that Company A was seeking to acquire. The accountant faces an ethical dilemma as he possesses confidential information about both Company A and Company B's plans through his work with each client.
2. Scenario A of case study:
Sole practitioner who provide the accountancy service to
Company A
Contracted for 3 years
3. Cont’d scenario A:
• He prepared year end accounts for company ‘A’
• Tax compliance work
• Due diligence exercise in respect of the intended
purchase of a small hardware business in the
neighboring town.
Due diligence: it is a process to figure out the
capital through liabilities, risk, benefits etc.
4. Cont’d scenario A:
when contract ended
Scenario B:
another local sole practitioner suffered from heart
attack he is not able to do his own works for two
months that’s why you helped him for two
months through deal with his clients.
The company A have another alternative firm’s
option of accountant that were low cost that’s
why company' A’ contracted with them
5. Cont’d. Scenario B:
One of the clients of the incapacitated practitioner:
Company B
Operates a shop selling
electrical goods
6. Cont’d Scenario B:
Company B called him to arrange a meeting to
discuss a business venture that they are
considering
At the meeting client explains that he intends to
make an offer for the same small hardware
business that company A is seeking to acquire.
He is aware that they are another bidder for the
business. and company B don’t know about his
past.
7. Cont’d scenario B:
When the meeting is over,
accountant start to feel un easy. Either he provide
a valued service on be half of the practitioner for
whom he is the continuity provider. OR
And he realize that he is also in possession of
confidential information concerning the plans of
your previous client (company A).
8. Who are the stakeholder in this
situation?
• company A
• Alternative firms of accountant
• Another local sole practitioner
• Incapacitated practitioner (company B)
9. What are the ethical issue in this situation?
accountant want to share the secret of company-
A that is unethical according to confidentiality
rules of ethical dilemma.
What would you do in this situation?
we should do our routine works we will not share
the secrets of others.
10. What are the possible alternatives?
• Accountant can tell to company A about
company B what are their strength or weakness
of company B it will be enough for accountant to
build the relationship with company A.
what are the ethics of the alternative?
If accountant goes for alternative so it will also
violence of confidentiality rules of ethical
dilemma.
11. What are the practical constraint?
• Accountant must do his own work and don’t go
for any credit from company A and company B.