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

Orion Group's consolidated profit is just below a threshold that triggers a management bonus. The group accountant, Dev, is pressured to defer recognition of a 4 million impairment on a subsidiary's goodwill, although indicators clearly exist. Which action best reflects professional behaviour in the public interest?

Dev should recognise the full impairment required by IAS 36, document his judgement and escalate the pressure internally, for example to the audit committee. Deferring or halving the loss would be intentional misstatement, and publicising the matter immediately would breach confidentiality before internal routes are used.

  1. ADefer the impairment to the next period, as the amount is only 4 million and the bonus is contractual
  2. BRecognise the impairment as IAS 36 requires, document the reasoning, and escalate the pressure through internal channels such as the audit committeeCorrect
  3. CRecognise half the impairment as a compromise between management and the standard
  4. DResign immediately and inform the press about the pressure

Explanation

IAS 36 requires an impairment loss when the recoverable amount is below carrying amount, regardless of bonus effects. The accountant should apply the standard, document it and use internal escalation such as the audit committee. Partial recognition is still misstatement, and going straight to the press breaches confidentiality without exhausting internal routes.

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