Question: randall a young chartered accountant recently joined tidal mining limited...
Randall, a young Chartered Accountant recently joined Tidal Mining Limited, a coal mining company listed in the Australian Stock Exchange. Randall reports to Joe, the Chief Finance Officer of the firm.
After 4 months in his job, he has discovered some dubious practices in the company. He realised that the inventory of Tidal had been over inflated by $50 million as a result of shifting the “mine overburden*” from being an intangible asset on its books to a current asset".
Randall also discovered that National Audit Services, the auditor for Tidal have never attended any stock-takes and have never engaged any experts in valuing the mines. Michael, the audit partner of National Audit Services, had in the past years signed off the audit reports with unqualified opinions for Tidal Mining Ltd's for the financial report. Furthermore, over 50% of Tidal Mining Ltd non assurance services were performed by a related consultancy firm of National Audit Services.
Randall was disturbed with the situation of the valuation of the mines as it will have a significant impact on the financial reports if the valuation was corrected. Randall decided to diplomatically seek Joe’s advice on valuation of mines, without raising any of his other findings. In the meeting, Randall noticed that Joe was uneasy with the findings, and he argued that the auditors had never brought this up as an issue. Joe praised Randall for being meticulous in his work but advised against raising this issue again. Joe assured Randall that he will have a bright future with Tidal Mining Ltd.
Recently, Sydney Investment Group bought $5 worth of million shares in Tidal Mining Ltd. Within two months of the share purchase, the government introduced a carbon tax and Tidal Mining Ltd. suffered severe cash flow problem and was forced into liquidation.
a) Define the ethical issues
b) Identify the major principles, rules and values