ethical issues Harvard Case Solution & Analysis

Ethical issues Case Study Solution

Introduction to Ethics:

Ethics is a philosophy of discussion that what is right and wrong while taking a decision. It is not necessary that “What society accepts” or “law Allowed” is permissible in while taking ethical decision. At times society accept the behavior that is prohibited in the judgments of ethics due to maintained standards, or having morally corrupt value. And sometime law have some grey areas for a particular, where an individual have to take decision morally. Ethics can never be taught although many religion including Islam, Hinduism, and Christianity stresses to follow life morally.

Issues Raised During Financial Planning:

One of the Client named ask-electric wants to get a loan from outside source and client is not sure about their financial conditions so they need a financial planner who helps them, on this matter so they request the company named as “Mahmoud services provider” to carry out an assignment which ensure their financial conditions.

First of all Mahmoud services planners should considerk-electric credibility to find whether they are able to fee for the assignment. If yes then k electric on financial matters, Mahmoud services will face many ethical issues.

Integrity and independence:

Integrity mean an individual should be honest and straight forward in all dealing even if no seeing him, this come into threat when independence is compromised due to numerous reasons. In this case if financial planner thinks that his stack is affected assuming he is providing any other service which resulting in a major portion of its revenue then his integrity and independence will be compromise. And he will unable to produce the factual results if K-electric stresses them to do so. Not providing the factual financial position will make false judgment to supply funds which ultimately may result k-electric unable to fulfill covenants. And will be move the planner into worst situation. The best possible solution here is that planner have to examine all arrangements they are in with the K-electric, and withdraw from the arrangement which planner feel less beneficial but mitigating the threat for him

Intimation threat:

Intimation threat is that planner independency is compromised due to fear of the client made either intentional or unintentionally. Financial planner need sufficient information from the client in order to provide financial situation of the company. If k-electric do not provide all required information or intimidate planner anyway to produce what they need, then service provider faces ethical delimma. A good solution to this problem is to resolve the issue with independent group governing the company like non-executive director and audit committee.

Conflict of Interest:

Conflict of interest is a threat there will be a clash of interest while reaching to any decision and like in the case if k-electric is providing you service fee that is more than the basic service position derived or the fee depend, the planner now bound in making the report that will give illegitimate favour to K-electric. The best solution to avoid the threat is to set right fee considering the assignment, fee charge by the planner does not incorporate any effect of the financial position of K-electric.

Independency threat

Planner may face the independency threat if there is already significant amount outstanding by K-electric, and due to which planner will adhere to all illegitimate desires of K-electric for clearing pending fee. The best solution here is to insist K-electric to clear outstanding fee after than planner should enter into another arrangement.

What Regulatory Bodies Says On The Issues?

There are many models of different countries covering the ethical dilemma and these model helps an individual how to make a decision that will not compromised his independence. Here is the explanation on one of the model in American jurisdiction known asAmerican Accounting Association Model. This model explains seven series model.

What Are The Facts Of The Case?

Mahmoud services provider should consider following factor should not be in place, that they should not getting high fees than market norm, fee should not depend on revenues, no intimidation by any of the stack holder or high outstanding fee.

ethical issues Harvard Case Solution & Analysis

Ethical Issues ofthe Case:

If any of the factor mentioned above or other that originate threat of independence then this would be against of the jurisdiction’s code of ethics as prescribed in American Accounting Association Model

What Are The Norms, Principles Says On This Matter:

Jurisdiction’s codes of ethics say “that company Mahmoud services should not provide false financial Result to k-electric for his loan. Since, service provider knows the information will be inaccurate. Financial planner need follow the code of ethics.”

Alternative Courses of Action:

The model says company Mahmoud services has the option whether to accepts the work fork-electric or rejects the work.

What are The Best Courses of Action That Is Consistent with Principles and Norms of Jurisdictions?

If planner knows that they are unable to produce facutal results assuming he fails to mitigate threat if any arises, he should withdraw the assignment or if planner is able to mitigate arising threat they should welcome the assignment. And all models emphasize that professionals should work according to code of ethics......................

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