8 Questions
What is a threat to professional competence in advising on corporate reporting?
Incomplete or restricted information
Which of the following is a threat to objectivity in advising on corporate reporting?
Financial interest in the company's success
According to the ACCA Code of Ethics and Conduct, what must accountants avoid in reports or returns communications?
Associating with reports that contain materially misleading statements
What is a consequence of unethical financial reporting?
The company may go under, affecting the whole community
What is the most common type of fraud in financial reporting?
Improper revenue recognition and overstated asset valuations
What is an example of unethical behaviour in financial reporting?
Capitalizing costs that should be expensed
Why is it important to follow laws and rules of accounting when preparing financial reports?
To minimize the risk of fraud and misstatement
What is a consequence of a company going under due to unethical financial reporting?
The government loses tax money and the community is affected
Study Notes
Threats to Professional Competence
- Insufficient time can threaten professional competence in advising on corporate reporting
- Incomplete, restricted, or inadequate information can also pose a threat
- Lack of sufficient experience, training, or education can compromise professional competence
- Inadequate resources can further hinder professional competence
Threats to Objectivity
- Financial interests, such as profit-related bonuses or share options, can threaten objectivity
- Inducements that encourage unethical behavior can also compromise objectivity
ACCA Code of Ethics and Conduct
- Accountants must not be associated with reports or returns that contain materially misleading statements
- Accountants must not be associated with reports or returns that contain statements or information furnished recklessly
- Accountants must not be associated with reports or returns that have been prepared with bias
- Accountants must not be associated with reports or returns that omit required information, which could lead to misleading conclusions
Ethical Financial Reporting
- Accountants must follow laws and rules of accounting when preparing financial reports
- Unethical behavior in financial reporting can lead to incorrect financial reports, which can have severe consequences
- Consequences of unethical financial reporting include:
- Shareholders losing money
- Employees losing jobs
- Impact on the community
- Government losing tax revenue
- Customers losing their source of goods
- Common frauds in financial reporting include:
- Improper revenue recognition
- Overstated asset valuations
- Capitalizing costs that should be expensed against profit
- Non-recognition of impairment losses
This quiz covers the ethical and professional issues in advising on corporate reporting, including threats to professional competence and objectivity, as outlined in the ACCA Code of Ethics and Conduct.
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