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ACCA Applied Knowledge · Business and Technology · Fundamental principles of ethical behaviour

Priya, a professional accountant in business, is asked by her finance director to alter a provision so that the company meets a bank covenant. She believes this would be misleading. Which action should she take FIRST?

Priya should first follow her employer's internal procedures to resolve the conflict, such as escalating to higher management or those charged with governance. External reporting or resignation are later steps if the matter remains unresolved. Complying with the misleading adjustment would breach the fundamental principles of integrity.

  1. AReport the matter to the external regulator immediately
  2. BFollow the employer's formal internal procedures to resolve the conflict, such as raising it with a higher level of managementCorrect
  3. CResign from her position immediately
  4. DMake the adjustment but keep private notes about her objection

Explanation

The usual approach is to first consider the organisation's internal conflict resolution procedures, escalating to higher management, audit committee or those charged with governance. Immediate external reporting or resignation comes later if the matter is unresolved. Making the adjustment would breach integrity and professional behaviour.

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