Problem: John Frederick Kamalie (JFK) is the Professional Accountant for ABC Electronics (Pty) Ltd (ABC). JFK makes use of Monster (Pty) Ltd (Monster) as the supplier for any training material that ABC might require. JFK has been receiving all-expenses-paid international holidays from Monster for the past three years as a "Thank you" for their business.
JFK requested Monster to develop training material for their leadership teams for all the ABC offices in South Africa. The budget for the development is R2 000 000 which was agreed with Monster after taking into account the time needed as well as the relevant cost per training module. Once the training material was complete, ABC received an invoice of R2 500 000 from Monster. JFK has therefore set up a meeting with Monster to discuss the additional R500 000 that was invoiced.
During the meeting, the CEO of Monster, James Newlands, indicated that Monster spent more time on developing the training material than was originally anticipated and hence the reason for the additional R500 000 that was invoiced. However, based on JFK's review of the training material, it is clear that the training material is basically the same as the training material developed for a previous year's training, with only minor changes. JFK feels conflicted about approving the additional R500 000 based on the work done. However, he is worried if he doesn't approve the additional R500 000 it might affect his holiday to Singapore that he planned for this year, which is normally paid by Monster.
REQUIRED:
Provide and discuss the threats in terms of the Code of Professional Conduct identified in the scenario. Also, provide safeguards for each of the threats identified.