Choose an ethical approach and explain the steps one should take when one discovers that a supervisor is performing a lawful, but immoral act.

From this point of view, you'd need to be specific about the "immoral" act. Is it being promiscuous? Is it juggling the company's books? Is it denying a welfare client her rights? 

Then decide how this immoral act affects your organization. If it doesn't have much effect, then -- since this is your supervisor -- then you'd probably do nothing. If it does have an effect, they you'd probably talk with your supervisor's supervisor or an ombudsman within the organization.

Bis your correct answer