solution

Answer should be at least 300 words all together

Question Presented:

You are a qualified accountant in practice, and you lead a team
providing management
consultancy services. In recent years your practice has undertaken several assignments on
manufacturing efficiency improvements for a medium-sized, quoted group of companies. It
operates through a number of divisions, but line responsibility appears complicated, andso
significant control rests with four semi-autonomous regional
directors. The authority of
these directors is enhanced by their seats on the group’s main board.

You have cultivated a good working relationship with the regional director with whom you
are in contact most frequently. Three weeks ago that regional
director asked you to
investigate, as a matter of urgency, a particular project, Project A. He had been irritated to
be told, informally, of the likely deferral of the agreed delivery date for the components on
this sophisticated design-and-build contract. Project A comes within the regional director’s
responsibility primarily because of the location of the factory
that makes the key components.

Once on site, your team had discovered a range of difficulties with the project, starting with
fundamental design faults and extending deep into the manufacturing processes. It isclear
that various contracts will be breached, and litigation is likely
to follow. Your team has
produced a prioritized list of actions and begun working to establish a revised scheduleto
take the project to completion.

At a recent meeting, you gave the regional director and the factory manager your estimate
that the delay to Project A will be a minimum of three months. You
indicated that extra
direct costs are likely to be $7 million to $10 million. This is before any potential claims for compensation.

On the instructions of the regional director, your team has been working on a formal report
specifying detailed recommendations. While still incomplete, the report appears certain to
support your previous estimates.

You are aware, from the financial press, that the group is rumored to have difficulties with
its bankers. You assume that the situation with Project A is likely to be seriously detrimental
to the group’s financial position.

One week before the final version of the report is due, you receive a surprise telephone call
from the group’s finance director. He explains that he is about to
enter a main board
meeting, but needs to know a date for delivery of the report on Project A. Late the previous
evening, the regional director had informed the finance director
that your firm had been asked to provide the report.
He says:

“I appreciate that you have only just started, so there are no reliable estimates yet. But the
regional director mentioned that Project A could incur around $4
million to $5 million in
extra costs, with income delayed by perhaps six to eight weeks. The regional director has
sent his apologies to the board meeting, as he has to attend a family funeral.”He
adds:“Hopefully, the regional director is being cautious, but if something does turn out to be as
wrong with Project A as those numbers suggest, the extra costs and deferred incomehave
serious implications for the group’s cash flow. The full board will need to start planning
remedial action now. When will your report be ready?”

Key fundamental principles

Integrity:How do you maintain your
professional integrity: by responding only to the
question asked or by immediately alerting the finance director and the main board to the
seriousness of the situation?

Objectivity:Does loyalty to the regional director, from whom your firm usually takes
instructions, outweigh your responsibility to the main board? If not, can you resist any
feeling of intimidation from the regional director that you may be experiencing?

Confidentiality:Confidentiality is fundamental to the assignment as a whole. But to whom
is the duty of confidentiality owed?

Professional behavior:The information you have could assist the main board significantly
with the discharge of its duties. Whether you disclose the information now or restrict the
information you provide pending a discussion with the regional
director, how can you protect your reputation and that of
your firm?

Identify relevant facts:

Identify relevant employment issues:

Identify affected parties:

Who should be involved in the resolution: