The paper "AAA Model and Good Corporate Governance to Reduce the Audit Risk" is a wonderful example of an assignment on finance and accounting. The American Accounting Association (AAA) model is a seven-step process aimed at providing logic in decision making by taking ethical issues into consideration. The seven steps involved are: the establishment of the facts of the case, identification of ethical issues in the case, identification of the principles, norms, and values in the case, identification of the available courses of action, compare values with the alternatives stated, consider and assess the consequences of the alternatives, and finally, the decision is made (Flanagan & Clarke, 2007).
This part follows the American Accounting Association (AAA) model to analyze the given case and then make a final decision on the same. Determine the factsThe facts are that the CEO of Complete Cancer Care Limited (CCCL), Adam Chase, knows clearly that the linear accelerators are old and have adverse radiation impacts on patients, and despite this, he tries to bribe Belinda Battersby, the audit partner responsible for the financial report and requests her to give a false opinion that the accelerators are fit for use.
Adam knows that the opinion given on the linear accelerators will have an impact on the decision made by the Battersby and Associates on the tender. The decision to be made is on whether Belinda should just follow Adams's instincts or she should say the truth about the actual state of the linear accelerators. Telling lies may have a positive impact on Adam’ s company, but the real thing is that this may negatively impact on the reputation of Belinda, who is a professional auditor and by law, she is supposed to always say the truth of the matter (Flanagan & Clarke, 2007). Define the ethical issuesThe ethical issue, in this case, is whether or not the auditor, Belinda Battersby should accept giving false information about the actual state of the linear accelerators as a way of bribe from the CEO of Complete Cancer Care Limited (CCCL), Adam Chase.
If Belinda accepts to tell lies on the same, she would be acting illegally and at the same time, she would also be negligent of her professional duties. Identify the major principles, rules, and valuesThe principles, rules, norms, and values, in this case, are that shareholders of companies, as well as other active stakeholders in capital markets, tend to assume that auditors have perfect integrity and that they provide a ‘ true and fair view’ of the financial situation of the company at the time when the audit is being done.
Auditors are people who are highly trusted to assure a company’ s financial accounts, and anything that interferes with this is termed as a failure of the auditor to shareholders (Flanagan & Clarke, 2007).
Beekes, W., & Brown, P. (2006). Do Better‐Governed Australian Firms Make More Informative Disclosures? Journal of Business Finance & Accounting,33(3‐4), 422-450.
Flanagan, J., & Clarke, K. (2007). Beyond a Code of Professional Ethics: A Holistic Model of Ethical Decision‐Making for Accountants. Abacus, 43(4), 488-518.
Ryan, H. E., & Wiggins, R. A. (2004). Who is in whose pocket? Director compensation, board independence, and barriers to effective monitoring. Journal of Financial Economics, 73(3), 497-524.