Ethical Scenarios
Case Study
Topic of Interest
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Internal Auditors
Ethical Scenarios


Case step 1

Ernest is the Internal Audit Manager of XYZ Co. Ltd., a listed company in Hong Kong.

Case step 2

Ernest received an anonymous letter alleging a possible fraud in the company.

Case step 3

Following Ernest's diligent investigation, there was evidence showing significant wrongdoing by Margaret, the Purchasing Director who was closely acquainted with the Managing Director.

Case step 4

Margaret's malpractices included operating bogus companies to supply materials to XYZ Co. Ltd., accepting secret commissions in awarding contracts and claiming private expenses through the company's accounts.

Case step 5

Ernest presented his findings to the Managing Director and expected appropriate action to be taken by the management.

Case step 5

However, the Managing Director criticised Ernest for being over-zealous in the case.

She said that Margaret was a respected senior staff member in the company.

Case step 5

The evidence presented by Ernest was questioned in minute details and the accusations were dismissed as minor.

The Managing Director instructed Ernest to stay away from the case.

How should Ernest react?

Commentaries on the case

Topic of Interest Case Study Ethical Scenarios
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