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Q1. Steven and Lamont have recently set up an accounting practice in partnership. They have prepared a written partnership agreement in which it states that any purchase over $1,000 shall only be made after both partners agree. Steven and Lamont purchased all their office furniture and equipment from Mack at Office Stuff. Mack contacted Steven and offered the partnership a great deal on a computer package for $2,000. Lamont is out seeing clients and cannot be contacted. Steven goes ahead and purchases the computer package. When Lamont is informed he says the purchase is not valid and wants Mack to take the computer package back and refund their money. Mack refuses. Discuss the issues raised and the likely outcome of these circumstances.

Q2, Moe, Larry and Curly are licensed trustees of SensationalSuper, a RSE. The fund has not been performing well and the trustees are keen to increase investment return to members. Moe and Larry decide that the best course of action is to invest in higher risk activities where the investment return is greater. Curly points out that higher risk means higher loss if the investment is not successful. Moe and Larry laugh at him saying 'no pain no gain'. The trustees invest 50% of the available funds in a digital animation and movie company, whose first three projects fail. The loss to the fund is massive. It is also revealed that two directors of the movie company are Larry's daughters from his first marriage.

Discuss the issues and possible consequences raised by these circumstances.

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