ACCA Strategic Professional · Strategic Business Reporting (International) · Professional and ethical behaviour in corporate reporting
Zeta plc's finance director asks Maria, a professional accountant, to reclassify a large loan as non-current so that covenant ratios look compliant, even though repayment is due within ten months of the reporting date. Which fundamental principle is most directly breached if Maria complies?
Integrity is breached. Reclassifying a loan that is repayable within twelve months as non-current knowingly produces misleading information, so the accountant would be associated with a false presentation. The problem is dishonesty, not lack of knowledge, confidentiality or a conflict of interest.
- AIntegrity, because she would be knowingly associated with misleading informationCorrect
- BConfidentiality, because covenant details would be disclosed
- CProfessional competence and due care, because she lacks IFRS knowledge
- DObjectivity, because she has a family relationship with the lender
Explanation
Presenting a loan due within twelve months as non-current knowingly misstates the financial statements, which breaches integrity (straightforward and honest, not associated with misleading information). Competence is not the issue, as she knows the facts. Nothing in the scenario suggests disclosure of confidential data or a family relationship.
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