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ACCA Strategic Professional · Strategic Business Reporting (International) · Professional and ethical behaviour in corporate reporting

Amira, a professional accountant in business at Zentra plc, is pressed by the finance director to defer recognising a large impairment so that a loan covenant is not breached. Amira believes the deferral would breach IAS 36 and mislead lenders. Under the ACCA/IESBA approach to resolving ethical conflicts, what should Amira do FIRST?

Amira should first follow the organisation's internal conflict resolution process, considering the facts, the ethical principles at stake and alternative courses of action. External disclosure or resignation are later steps if internal escalation fails, and simply obeying a senior colleague would breach her professional duties.

  1. AResign immediately and inform the lenders directly
  2. BFollow the organisation's internal conflict resolution process and consider the relevant facts, ethical principles and courses of actionCorrect
  3. CRecord the impairment secretly in a separate ledger without telling anyone
  4. DComply with the instruction because the finance director is senior

Explanation

The framework expects the accountant first to gather relevant facts, identify the ethical issues and principles involved, and follow internal resolution procedures, such as escalating to those charged with governance. Immediate external disclosure or resignation comes later if the matter remains unresolved. Obeying a superior does not remove the duty to comply with IFRS.

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