B) What are the ethical issues?

By answering this case, we apply use application of the conceptual framework or

code of ethic in order to resolving ethical dilemmas in this case. There have three
fundamental principle we using in answering this case. There are integrity, objectivity and
professional competence.
Key fundamental principle?
Integrity: Should Madam Tan do their responsible to put through a market value adjustment
for the inventory or just do what approach by Director
The first one is the integrity. By referring to this case, Madam Tan face dilemma
either to follow what direct by her director which not disclose information to the auditor and
she was told to lie about the information if auditor discover it. This mean she dilemma either
to violate the integrity by not followed what required by director or to act honestly.
Key fundamental principle?
Objectivity: Should Madam Tan act undue influence that order by director or stand up with
the professional act without breach their objectivity.
The next ethical issues is objectivity. Under this principle, its our duty and
responsible not to allowed bias, undue influence of other to override professional or business
judgment. According to this case, it clearly that Madam Tan face dilemma to keep their
objectivity due to their director approach her to do something make their objectivity will be
compromised.
Key fundamental principle?
Competence: Madam Tan should exercise diligence and must comply with accounting
standard and know to whom she owe a duty (director or professional standard?
Last ethical issues would be is competence. According to this case, Madam Tan
notice that some of the inventory is slow moving. She has to remain competence as to follow
the set of standard that are directed to her. This is to prove that she have the competency in
her job. There is potential issues here if she did not make any amendment to the inventory
valuation.










C) Who are the primary stakeholders?
Primary stakeholders defined as individuals or entities that benefit from or are directly
impact by the activities and operation of companies. According to the Rehman (1964) define
as stakeholders are individuals or groups who are depending on the firm in order to realize
their personal goals and on whom the firm is depending for its existence. Usually primary
stakeholder is internal stakeholder, whos directly engage in business activities such as
customers, employees, suppliers, board of director, owners and shareholders.
According to this case, Madam Tan as Finance Manager is the one that involve in the
handling of the inventory and making update about it. She is engaging in the economic
transaction with the business. This is due to the fact that the decision she made would affect
the whole account and the financial performance of the company.
The second primary stakeholders here are the Mark, the company director. He is
mainly the cause of action of the case and it involve directly to him in all area of decision. As
stated the decision make will cause the financial performance of the company to be affected.
The other stakeholder is the shareholder. They will be impacted with the business
activities and the performance. The inventory valuation will surely impact the financial
performance and it would provide a misleading data that would actually made the shareholder
to believe that the company is doing well but actually it other way around.
The other primary stakeholder that can be identified in this case are auditors, Evelyn
as Sales Manager, Diana as inventory control clerk, and customers.