The sales representatives committed an offence under Section 9(3) of the Prevention of Bribery Ordinance (POBO) offence if they had submitted false documents i.e. claims of commissions or entertainment expenses to deceive their principal i.e. the company.   

Furthermore, the offering of illegal commissions to agents of business clients with a view to obtaining or securing business might constitute a bribery offence under the POBO.   Agents of clients should obtain permission from their principals, i.e. their employers, for accepting advantages or commissions in relation to their work.  As approval should be given by the principal of the acceptor not the offeror, the Managing Director’s approval on the expense payments would not be considered the principal’s approval in this case.  

Although the clients were located in the Mainland, if any part of the act of bribery (including offering, soliciting or accepting a bribe) takes place in Hong Kong, the case may still be pursued by the ICAC under the POBO.  In any case, customary trade practice could not be a defence in any proceeding for a bribery offence under the POBO.  

Andrew should bring the issues to the attention of the company management and avoid involve in any acts that might call his integrity and professionalism into question. He should take into account his own views on ethics and legality and offer advice to the management if there were better alternatives.  

If corruption involving senior management was suspected, and all his attempts to find legal and ethical alternatives were rejected, then Andrew should consider resigning from the company and refuse to carry out any illegal transactions. He should consider reporting corruption to the ICAC and other crimes to the police.

The school secretary might have committed an offence under Section 9(3) of the Prevention of Bribery Ordinance (POBO) if he had submitted false documents, i.e. false PTA accounting records, to deceive his principal, i.e. the school.     

Though being a voluntary treasurer, Mike still has professional obligations to the PTA.  Mike should bring the issue to the attention of the PTA or consider reporting the suspected fraud to the school or law enforcement authorities. He should also avoid involve in any acts that might call his integrity and professionalism into question. He must take into account his own views on ethics and legality and offer advice to the PTA if there were better alternatives.  

As a professional accountant serving as a volunteer, Mike should always observe the Code of Ethics of Professional Accountants and comply with the fundamental principles of integrity, objectivity, professional competence and due care and avoid any conflict of interest. 

The offering of “reward” by Billy as an inducement for Jimmy to misrepresent the financial position of B&B Co. Ltd. was a breach of Section 9 of the Prevention of Bribery Ordinance (POBO).  Jimmy should refuse Billy’s offer and make it clear to Billy that while B&B Co. Ltd. was an important and valued client of his firm, no financial inducement or veiled threat would cause him to compromise his independence and professional integrity in connection with either the company's forthcoming audited financial statements or any other professional engagements carried out for B&B Co. Ltd.

Jimmy might consult a fellow partner at this stage in considering his alternative responses to this sensitive situation and in clarifying his own professional responsibilities in the circumstances, although remaining mindful at all times of the need to preserve client confidentiality.  In the event that Jimmy had no appropriate internal channel for such consultation, he might consider consulting the Hong Kong Institute of Certified Public Accountants.

As Billy’s close friend, Jimmy should explain to Billy that the use of “whatever device he could to improve the financial position of B&B Co. Ltd.” was inappropriate, and that he and his firm would endeavor to help the company overcome the current challenges by legitimate means.

If Billy was unwilling to change his position and insisted on carrying through his threats, Jimmy should point out that, having substantially completed the audit that they were engaged to perform, his firm would propose to issue a qualified report if B&B Co. Ltd.’s financial statements did not give a true and fair view. 

Having fulfilled their statutory responsibility by reporting to the shareholders, Jimmy should explain that his firm would tender their resignation.  Details of these circumstances would also be given to any proposed successor firm of auditors in etiquette correspondence.  In the event that B&B Co. Ltd. attempted to remove Jimmy's firm from office, Jimmy should explain that he would consider making similar representations to the shareholders as entitled under the Companies Ordinance.

Jimmy was suggested to report the attempted bribe to the ICAC to safeguard his own interests.