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

Kestrel Co's finance director is asked by the chief executive to delay recognising a known inventory write-down until after the year end so that a profit-linked bonus target is met. Which fundamental ethical principle is most directly threatened by complying with this request?

Integrity is most directly threatened, because deliberately delaying a known inventory write-down to hit a bonus target involves knowingly presenting misleading financial information, which conflicts with the duty to be straightforward and honest in professional and business relationships.

  1. AIntegrityCorrect
  2. BProfessional competence and due care
  3. CConfidentiality
  4. DProfessional behaviour only in relation to advertising

Explanation

Knowingly delaying a required write-down to meet a bonus target means presenting misleading information, which breaches the duty to be straightforward and honest, i.e. integrity. Competence and confidentiality are not the core issue, and professional behaviour is not limited to advertising.

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