Melbourne, Victoria has arranged a meeting with Matt Rankin

Referencing Styles : Not Selected This mini case study is designed to encompass the following graduate skills/capabilities: written communication in the form of a brief written report, critical thinking, problem solving, decision making, information literacy and ethical awareness and of course, improving your basic understanding of professional accounting practice. Feedback will be given on your case study and your grade will be available in Moodle on LMS. Stephanie Birchgrove, manager and owner of an advertising company in Melbourne, Victoria has arranged a meeting with Matt Rankin, the chief accountant of a large, local competitor. The two are lifelong friends. They had grown up together in a small Victorian country town and attended the same primary and secondary schools and university. Matt was a competent, successful accountant with FCPA designation but currently was experiencing some personal financial difficulties. The financial problems were created by some investments that had turned sour, leaving him with a $100,000 personal loan to pay off – just at the time his eldest son was scheduled to commence his secondary education at an expensive private school. Stephanie on the other hand, was struggling to establish a successful advertising business. She had recently required the franchise rights to open a branch office of a large regional advertising firm, headquartered in Adelaide, South Australia. During her first two years, she managed to build a small profitable practice, however, the chance to gain a significant foothold in the Melbourne advertising community hinged on the success of winning a bid to represent the state of Victoria in a major advertising campaign to attract new industry and tourism. The meeting she had scheduled with Matt concerned the bid she planned to submit. Stephanie: “Matt, I’m at a critical point in my business venture. If I can win the bid for the state’s advertising dollars, I’ll be set. Winning the bid will bring in $6,000,000 to $7,000,000 of revenues into the firm. On top of that, I estimate that the publicity will bring in another $2,000,000 to $3,000,000 of new business.” Matt: “I understand. My boss is anxious to win that business as well. It would mean a huge increase in profits for my firm. It’s a competitive business, though. As new as you are, I doubt that you’ll have much chance of winning.” Stephanie: “You may be wrong. You’re forgetting two very important considerations. First, I have the backing of all the resources and talent of a regional firm. Second, I have some political connections. Last year, I was hired to run the publicity side of the Premier’s election campaign. He was impressed with my work and would like me to have this business. I am confident that the proposals I submit will be very competitive. My only concern is to submit a bid that beats your firm. If I come in with a lower bid and with good proposals, the Premier can see to it that I get the work.” Matt: “Sounds promising. If you do win, however, there will be a lot of upset people. After all, they are going to claim that the business should have been given to a local advertising firm, not to some out-of-state firm. Given the size of your office, you’ll have to get support from Adelaide. You could take a lot of heat.” Stephanie: “True. But I am the owner of the branch office. That fact alone should blunt most of the criticism. Who can argue that I’m not local? Listen, with your help, I think I can win this bid. Furthermore, if I do win it, you can reap some direct benefits. With that kind of business, I can afford to hire an accountant, and I’ll make it worthwhile for you to transfer jobs. I can offer you an up-front bonus of $15,000. On top of that, I’ll increase your annual salary by 20 per cent. That should solve most of your financial difficulties. After all, we have been friends since day one at primary school – and what are friends for?” Matt: “Stephanie, my wife would be ecstatic of I were able to improve our financial position as quickly as this opportunity affords. I certainly hope that you win the bid. What kind of help can I provide?” Stephanie: “It is simple. To win, all I have to do is to beat the bid of your firm. Before I submit my bid, I would like you to review it. With the financial skills that you have, it should be easy for you to spot any excessive cost that I may have included. Or perhaps I included the wrong kind of costs. By cutting excessive costs and eliminating costs that may not be directly related to the bid, my bid should be competitive enough to meet or beat your firm’s bid.” Required Matt is very worried about the situation he is in. He has asked you to write a very brief confidential report addressing the following: 1.Are Matt’s instincts correct – should he feel some reservations about analysing Stephanie’s bid? 2.Would it be ethical to analyse Stephanie’s bid? 3.By analysing Stephanie’s bid would Matt be violating any of the fundamental principles of APES 110 Revised Code of Ethics for Professional Accountants (effective 1 4.What would you advise Matt to do?

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