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

Priya, a professional accountant in business, is asked by the finance director to delay recognising a known impairment so that a loan covenant is not breached. Under the IESBA Code approach to resolving ethical conflicts, which action should Priya take FIRST?

Priya should first consider the facts, the ethical issues and the fundamental principles involved, then follow her employer's internal conflict-resolution procedures. External disclosure or resignation are later steps if internal escalation fails, and silence would breach integrity and professional behaviour.

  1. AResign immediately and inform the lender directly
  2. BConsider the relevant facts, ethical issues and fundamental principles involved, and follow the employer's internal conflict-resolution proceduresCorrect
  3. CRecord the impairment and say nothing to anyone to avoid confrontation
  4. DSeek legal advice only after the financial statements have been issued

Explanation

The conflict-resolution process starts with gathering the facts, identifying the fundamental principles at stake and using internal escalation procedures. Immediate resignation or external disclosure comes later, if the matter is unresolved. Staying silent breaches the integrity and objectivity principles.

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