Ethical dilemma 19: Everyone's a winner

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In 2008, ICAS Research published the report "What do you do now? Ethical Issues Encountered by Chartered Accountants" by Dr David Molyneaux containing 28 true life case studies of ethical dilemmas faced by accountants either in practice or business.

In recognition of this work, in 2009 the ICAS Technical Policy Board then published "Shades of Grey" containing a further series of case studies, one of which is reproduced below.

The views expressed in these respective case studies are those of the Ethics Committee and do not necessarily represent the views of the Council of ICAS.

This case study gives general guidance only and should not be relied on as appropriate or comprehensive in respect of any particular set of circumstances. It is recommended that users consider seeking their own professional advice.

The authors or the publisher can accept no responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication.


You are a recently qualified CA, working in the insolvency department of a medium-sized accountancy firm. You are currently working on the sale of a piece of land that belonged to a company that has gone into liquidation. The sale of the land stipulates that bids have to be submitted via email by midday that day. A few bids have been received but not as many as were anticipated. You are sitting drinking a cup of hot chocolate eagerly awaiting the "High Noon" deadline in order that you can collect any further bids and get out for your lunch. The local pub serves a very good pie and beans but is also very crowded on a Friday lunchtime. You are impatient to get there as soon as you can.  

At 11.30am you receive a call from a prospective buyer who wishes to remain anonymous. The caller informs you that he is very interested in the land but does not want to have to pay over the odds to ensure that he gets it. Therefore, he makes the following proposition to you:  

He is willing to pay a premium of 15% above the highest bid received by 11.55am provided he is informed beforehand of the highest bid received.  

The caller advises that this way everyone wins as he explains succinctly as follows:  

"Your firm and ultimately the bank win because a higher fee is received for the asset in question, I win because I do not have to make an unnecessarily high blind bid and you will also be rewarded by me for your hard work."  

He adds that this illustrates that "transparency is the best policy".  

The caller reiterates that this is the most effective outcome for all parties concerned and that your boss will be delighted that a last minute offer has at least ensured a reasonable return for the asset in question. The bank will also be very pleased as this sale will increase its level of return on the debt outstanding.  

You advise the caller that this is not the way that you or your firm do business and that if he wants to attempt to purchase the land then he should follow the required procedure of the sale and email his bid prior to the midday deadline.  

The caller advises that he respects your integrity but advises that this type of activity is commonplace in the industry and insinuates without naming names that other more senior personnel within your firm have taken advantage of his very generous financial terms in the past. Furthermore, the bank is unlikely to be happy if it was to find out that your firm had rejected a higher bid than what was eventually obtained for the asset. This could have a serious impact on any future work being awarded to your firm and your own career would suffer as a result.  

The caller then advises that he will phone you back in five minutes for a decision as to whether you will accept his proposition. You do not get a chance to reply, as the caller then hangs up.

What do you do now? 

Scenario Analysis

What are the readily-identifiable ethical issues for your decision?  

For you personally

The first issue is do you immediately raise this with someone senior before the caller phones back? Secondly, when the caller does phone back do you transfer the call to someone more senior, do you get someone more senior to listen in to the conversation or do you merely deal with the caller yourself?  

The third issue is do you raise sensitively and professionally, the caller's accusation relating to senior staff internally within your firm. Consideration should be given to discussing the matter with your firm's ethics partner, if there is one, or if not, with a trusted partner within the firm?
Who are the key parties who can influence, or will be affected by, your decision?  

'You'; the caller; the partners and staff in your firm; the bank; other creditors; and other prospective buyers.  

What fundamental ethical principles for accountants are most applicable and is there an apparent conflict between them?


Can you retain your integrity if you distort the tender process? How do you deal with the caller's allegations about more senior personnel within your firm?  


The need to consider the interests of all of the other parties involved in the tender process.  

Professional competence and due care  



How could one justify divulging confidential information to the caller in the interests of maximising the selling price of the land?

Professional behaviour  

You have to handle the client's allegations sensitively and professionally. You have no knowledge as to the accuracy of the allegations made by the caller.  

Is there any further information (including legal obligations) or discussion that might be relevant?  

All relevant information appears available.

Is there a conflict between the 'Guardian' and 'Commercial' strands of an accountant's responsibilities?  

From the given information, the firm and the bank would appear to be better off commercially if the information is divulged, although this is not certain as a late bid from an unnamed prospective buyer may yet be received prior to the deadline. The 'Guardian' aspect in this scenario is to ensure that a fair tender process is held which appears to be in conflict with the short-term commercial pressure.  

Based on the information available, is there scope for an imaginative solution?  


Are there any other comments?  



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