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ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession

An ACCA member who is financial controller of a listed company is told by the finance director to defer recognising a large expense so that the company meets its profit forecast. The member knows this would mislead users of the financial statements. Which fundamental principle is most directly threatened if the member complies?

Integrity is most directly threatened. It requires an accountant to be straightforward and honest and not to be associated with information the accountant knows to be materially misleading. Deferring a known expense to hit a profit forecast would breach this, even though the member has the technical skill to account correctly.

  1. AProfessional behaviour only, because no law is certain to be broken
  2. BConfidentiality, because internal information is being discussed
  3. CIntegrity, because it requires being straightforward and honest and not being associated with misleading informationCorrect
  4. DProfessional competence and due care, because the member lacks the technical skill

Explanation

Integrity requires an accountant not to be knowingly associated with misleading information. The member has the skill to account correctly, so competence is not the issue. Confidentiality is not at stake because nothing is being disclosed externally. Professional behaviour may also be affected, but integrity is the most direct principle.

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