Question

(a) Explain why each of the following actions appears to be in conflict with fundamental ethical principles (i) An advertisement for a firm of accountants states that their audit services are cheaper and more comprehensive than a rival firm; (ii) An accountant prepares a set of accounts prior to undertaking the audit of those accounts; (iii) A director discusses an impending share issue with colleagues at a golf club dinner; (iv) The finance director attempts to complete the company's taxation computation following the acquisition of some foreign subsidiaries; (v) A financial accountant confirms that a report on his company is correct, even though the report omits to mention some important liabilities. (10 marks) (b) Explain your response to the following ethical threats (i) Your employer asks you to suggest to a junior manager that they will receive a large bonus for working overtime on a project to hide liabilities from the financial statements. (ii) In selecting employees for a new division, you are advised to unfairly discriminate against one section of the workforce. (iii) You have been asked to prepare the management accounts for a subsidiary located in South America in accordance with specific requirements of that jurisdiction. In response to your comment that you do not understand the accounting requirements of that jurisdiction, your supervisor states 'no problem', no one will notice a few thousand dollars' error anyway'.

          (a) Explain why each of the following actions appears to be in conflict with fundamental ethical principles
(i) An advertisement for a firm of accountants states that their audit services are cheaper and more comprehensive than a rival firm;
(ii) An accountant prepares a set of accounts prior to undertaking the audit of those accounts;
(iii) A director discusses an impending share issue with colleagues at a golf club dinner;
(iv) The finance director attempts to complete the company's taxation computation following the acquisition of some foreign subsidiaries;
(v) A financial accountant confirms that a report on his company is correct, even though the report omits to mention some important liabilities. (10 marks)

(b) Explain your response to the following ethical threats 
(i) Your employer asks you to suggest to a junior manager that they will receive a large bonus for working overtime on a project to hide liabilities from the financial statements.
(ii) In selecting employees for a new division, you are advised to unfairly discriminate against one section of the workforce.
(iii) You have been asked to prepare the management accounts for a subsidiary located in South America in accordance with specific requirements of that jurisdiction. In response to your comment that you do not understand the accounting requirements of that jurisdiction, your supervisor states 'no problem', no one will notice a few thousand dollars' error anyway'.

Added by Catherine P.

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