The ethical issue of the case involves the internal auditor, Alison Lloyd, who decides to approve misdated invoices. Ideally, this is contrary to the IIA ethics code, which requires auditors to be honest and exercise due diligence in their reporting. In addition, the Gem Packing’s financial transactions and invoicing system are shrouded in falsification and dishonesty, and therefore if Alison Lloyd decides to give the invoices of Ace Glass Company a clean bill of health, the auditor will be liable for ethical malpractice. The legal issue of the case is the improper manner in which the purchasing division meets its quota and surpasses other divisions. The division collaborates with the sales division to delay the placing of orders, falsifying delivery dates, and allowing regular companies to send invoices for products that are not yet delivered. In essence, this practice can lead to a legal tussle in the event of any disagreements between the two companies. As a result, Ace Glass Company is likely to claim to have delivered the products it got paid for, a situation that could lead the management in trouble. However, there are no economic issues because everything eventually checks out.
The key facts, in this case, therefore, include the unethical and illegal practice of falsifying documents and misrepresentation of dates by the purchasing division. Allison Lloyd should be forthright and report these anomalies because they are both unethical and illegal, and in the long run, disadvantages other divisions. The key ethical considerations, in this case, include the need for honesty on the part of the auditor. Alison Lloyd should not approve the invoices from Ace Glass Company because they could lead to legal conflicts in future. The auditor should also maintain his independence and not allow Greg to influence his professional conduct or discharge of duties.
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