ACCA Strategic Professional · Strategic Business Reporting (International) · Professional and ethical behaviour in corporate reporting
Nadia, an ACCA member preparing the financial statements of Fenwick Co, finds that the board has chosen an aggressive but technically arguable IFRS 15 treatment that she believes gives a misleading impression of performance. She has raised it with the finance director without result. Which action best reflects the ACCA Code's expectations at this stage?
Nadia should escalate the issue to those charged with governance, such as the audit committee, consider seeking professional or legal advice, and keep records of her actions. Going to the press would breach confidentiality, while accepting a misleading treatment would breach integrity.
- AEscalate the matter to those charged with governance, such as the audit committee, and consider obtaining legal or professional advice, documenting her actionsCorrect
- BImmediately report the matter to the press to protect the public interest
- CAccept the treatment because it is technically arguable and the board has final authority
- DResign without informing anyone of the reason, to preserve confidentiality
Explanation
Where internal resolution with immediate superiors fails, the Code expects the accountant to escalate to higher levels, such as the audit committee, consider advice and document the matter. Going to the press would breach confidentiality without legal grounds, and silently accepting a misleading treatment breaches integrity.
Did you get it right without looking?
One question tells you little. A timed set on Professional and ethical behaviour in corporate reporting shows your real accuracy, how long you take and where you lose marks.
More Professional and ethical behaviour in corporate reporting questions
- Lumen Co's finance team prepares the financial statements. The chief accountant, Rosa, also sits on the committee that approves the same est…
- A listed entity's integrated report highlights only favourable environmental metrics and omits a regulator's fine that is material to stakeh…
- Zeta plc's finance director asks Maria, a professional accountant, to reclassify a large loan as non-current so that covenant ratios look co…
- Priya, a financial controller, is asked by the finance director to delay recognising a known inventory write-down until after the year end s…
- Which of the following best describes why a professional accountant who raises a concern about misreporting should keep a written record of …
- Which of the following lists correctly sets out the five fundamental ethical principles in the IESBA Code of Ethics that an accountant prepa…