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ACCA Strategic Professional · Strategic Business Reporting (International) · Share-based payment

A finance director of Omega plc, whose bonus includes share options vesting only if reported profit exceeds a target, asks the financial controller to defer recognising a cost for a related share-based award to meet that target. Which response best reflects the ethical requirements for a professional accountant?

The accountant should refuse and account for the award correctly under IFRS 2, then escalate to the audit committee or those charged with governance if pressure continues. Deferring the cost would breach integrity and objectivity, because the director has a personal financial interest in the reported profit target.

  1. ARefuse, since the request threatens integrity and objectivity, and apply IFRS 2 correctly, escalating internally if pressure continuesCorrect
  2. BComply, since the director is a senior officer and has authority over reporting
  3. CComply if the amount is below materiality for the group
  4. DResign immediately without raising the matter with anyone

Explanation

The request creates a self-interest threat and pressure to misstate. The accountant must not be associated with misleading information, so should apply IFRS 2 properly and escalate to the audit committee or those charged with governance if pressure persists. Resigning without raising the issue is not the first required step.

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