PRESENTATION OF THE FACTS SURROUNDING THE CASE.
The cases stated when the PPLC Ltd was deciding to have a joint venture with China. The joint venture set up in the 1990s. PPLC Ltd was a Malaysian company with lumber business in East Malaysia, Kalimantan, Australia and the United Stated of Amerika (USA). It had decided to set up a joint venture timber based company, YBLC, in Antu to exploit the pine timber resources in North East China and Siberia. Antu is a country of south eastern Jilin Province, North east China. It is under the administration of Yanbian Korea Autonomous prefecture. The case is about a financial controller – Malaysian joint venture was asked by a director representing the interest of the Chinese government, who was also a government official supervising foreign Joint Venture companies, to change the P&L position from loss to profit, so that he could paint a rosy picture in his report of Joint Venture performance under his charge. The dilemma can also face by an accounting working in a family owned company in Malaysia, where decision is made by the ever founded-owner. This case introduces the scenario in which an accountant may face when he works in a foreign country in a joint venture. The case also serves to illustrate the importance of corporate governance in the business world. Corporate governance encompasses achieving corporate mission or objective, law compliance, upholding code of best practices and adherence to business and personal ethics. The corporate governance could be the foundation of a better business world where fraud, malpractice, corruption could be minimized. The protagonist in this case reflected to Mr. Zhang as General Manager which also as the one who makes the decision. He is the one who need to decide the best way for two parties from this joint venture. How he reacts or solves the problem under pressure from the EO-cum-director, Mr. Lee. Whether he should follow Mr. Lee desired or just follow the Accounting Standard. The antagonist in this case reflected to Mr. Lee as Economic Officer which desired to show to his boss a good ‘report card’ regarding his work. He desperately wanted to show a good performance, so that he asks Mr. Zhang if he can approach the FC, Mr.T to alter the profit and loss position of the financial statement. IDENTIFIED OF KEY ISSUE
Conflict of interest – Mr. Lee
Mr. Lee as economics officer decision should be benefit to the company as a whole. However Mr. Make decision just to reward himself as he want good report card to get fast promote. Firstly prioritize as Mr. Lee always questioned by China civil service as why the all the company managed by him are not performing. Lack of the understanding of fiduciary Duties of Directors
Mr. T as financial controller must be professional and complied with code of ethic As an accountant Mr. T can’t breach his fiduciary duties just to satisfy his top management Mr. Lee and Mr. Zhang by making slightly amendment on financial statement. Second prioritize as Mr. T refused to commit the requirements as he is professional and stand on his own principle even though he is under pressure. The duties of directorsDirectors are required to exercise their power with competence (or skill) and diligence in the best interests of the corporation. They owe what is called a "fiduciary duty" to the corporation. The duty is a "fiduciary" duty because the obligation to act in the best interests of the corporation, at its core, is an obligation of loyalty, honesty and good faith. Modern corporations statutes governing business corporations provide a concise formulation of the fiduciary obligation owed by directors. Most of the corporations statutes governing not-for-profit corporations do not. The formulation of the fiduciary duty of directors has been developed at common law by Canadian and English courts or set out in the Civil Code. Directors' fiduciary duties can be divided into two main branches: The duty of care; and,...
Please join StudyMode to read the full document