Question Tag: Ethics

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CR – Nov 2024 – L3 – Q5b – Financial Performance & Digital Technology Integration

Evaluating the financial performance of Nsawkaw PLC and addressing challenges of digital technology integration in accounting.

Question

(a) Compute the following ratios for the years ended 2024 & 2023:
i) Operating profit margin
ii) Return on parent’s equity
iii) Earnings per share
iv) Current ratio
v) Trade receivables days
vi) Total liabilities to total assets %

(b) Write a report to the directors of DPEF evaluating the inter-period financial performance and position of NK using the above six (6) ratios. The report should draw attention to how the non-financial metrics combine with the financial counterparts to showcase the prospects and viability of NK. c) The concept of double materiality is relevant to sustainability impacts and dependencies. It
incorporates financial materiality and impact materiality.

Answer

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Tags: Compliance, Cybersecurity, Digital Transformation, Ethics, Financial Analysis, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements, Beyond financial reporting
Series: Nov 2024

AAA – Nov 2024 – L3 – Q1a – Ethical Issues in Audit Engagements

Ethical issues and professional conduct in an audit engagement involving conflict of interest.

Question

You are the Audit Partner of a mid-sized audit firm, Amoah Sonko and Associates. One of your major clients, Kudi LTD (Kudi), has approached you for a significant audit engagement. Kudi has been experiencing rapid growth and plans to get listed on the Ghana Alternative Market within the next year. During preliminary discussions, the Managing Director of Kudi, a friend, promised you a bonus if the audit report is completed quickly and is favourable, highlighting the company’s strengths.

In the course of the audit of Kudi, you came across a series of unusual financial transactions. These included large intercompany loans with its sister companies, other significant related-party transactions with the directors, and an unusually high volume of sales recorded a few days before the end of the financial year. Upon further investigation, your team found discrepancies in inventory records and evidence of potential non-compliance with revenue recognition standards. The Finance Manager insists these transactions are legitimate and necessary for the company’s rapid growth.

Additionally, you noticed that Kudi was involved in a high-profile legal battle with a major competitor, which was not fully disclosed in the financial statements. The lawyer for Kudi insists that you omit this information from the audit report, arguing it would damage the company’s reputation and its plans to get listed on the Ghana Alternative Market.

Required:
i) Identify TWO potential ethical issues in the scenario and explain the potential impact on your professional conduct. ii) Identify the steps you should take to address the conflict of interest presented by the Managing Director’s offer.
iii) Discuss the potential sanctions for accepting the Managing Director’s offer and providing a favourable audit report without proper verification.
iv) Evaluate the impact of the undisclosed legal battle on Kudi LTD’s financial statements and the upcoming initial public offer.

Answer

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Tags: Auditor Independence, Conflict of Interest, Ethics, Professional Conduct
Level: Level 3

Topic: Professional responsibility and liability, Rules of professional conduct
Series: Nov 2024

MA – Nov 2024 – L2 – Q2b – Ethical Standards in Business

Explanation of the need for ethical standards in business with reference to threats to ethical behavior.

Question

According to the IESBA Handbook of the International Code of Ethics for Professional Accountants, 2024 Edition, a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest and uphold ethical standards.

Required:

Explain the need for ethical standards in business (make reference to threats to ethical behavior).

Answer

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Tags: Business Integrity, Code of Conduct, Corporate Governance, Ethics, Professional Standards
Level: Level 2

Topic: Other Aspects of Performance Measurement
Series: Nov 2024

FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Question

Dahn is a Chartered Accountant who works for a large Pharmaceutical Company, Nimely Company Ltd (Nimely), as an Assistant Financial Controller. The Financial Controller of Nimely is also a Chartered Accountant with more than ten years of experience.

During the year, Nimely received a vehicle worth GH¢800,000 from the government to support its operations. According to the Government Official who presented the vehicle to the management of Nimely, the company has been compliant in filing and paying its taxes.

At the year-end, the Financial Controller passed the following entry in the Tally Software of Nimely Company Ltd:

Dr	Vehicle	GH¢800,000
Cr	Income	GH¢800,000

Dahn explained to the Financial Controller that the grant should be treated in line with the provisions of IAS 20: Accounting for Government Grants and Disclosure of Government Assistance. It is the company’s policy that such grants should be treated as deferred income.

The Financial Controller agreed that the treatment should have been in line with IAS 20, but mentioned that the entries should not be changed since the current treatment may help them meet their profit targets.

It is Nimely’s policy to depreciate its vehicles at a rate of 25% per annum on a straight-line basis.

Required:

i) Identify the ethical issues involved.
ii) Recommend the appropriate actions to be taken by Dahn.

Answer

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Tags: Ethics, Financial Integrity, Government Grants, IAS 20, Professional Conduct
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: Nov 2024

FM – Nov 2024 – L2 – Q1b – Ethical Issues in Financial Management

Discuss four ethical issues in financial management and their impact on decision-making.

Question

Finance Managers often encounter decisions that affect the organisation’s financial health and reflect its commitment to ethical standards. Balancing profitability with ethical considerations can be challenging, yet it is essential for sustaining long-term success and protecting an organisation’s reputation.

Required:
Discuss FOUR ethical issues in financial management.

Answer

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Tags: Corporate Governance, Ethics, Financial management, Professional Conduct
Level: Level 2

Topic: Ethical issues in financial management
Series: Nov 2024

AAA – May 2016 – L3 – Q2a – Ethical Issues in Auditing

Discuss the importance of ethical guidance for accountants in addressing money laundering concerns.

Question

(a) Comment on the need for ethical guidance for accountants on money laundering.
(5 Marks)

Answer

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Tags: Compliance, Ethics, ICAEW, IFAC, Money laundering, Professional Guidance
Level: Level 3

Topic: Ethical Issues in Auditing

CR – Nov 2016 – L3 – SC – Q5 – Ethical Issues in Corporate Reporting

Explain the concepts of creative accounting and window dressing, provide examples, reasons, and suggest preventive measures.

Question

Manipulation of reporting entities book’s and records have been termed in many quarters as “Creative Accounting” and “Window Dressing”. The Management of Wastage Plc requires clarification of these two concepts.

Write a report to the management of Wastage Plc that includes:
a. Definitions of Creative Accounting and Window Dressing. (2 Marks)
b. Five examples of each concept. (5 Marks)
c. Three possible reasons for Creative Accounting and Window Dressing. (3 Marks)
d. Advice to management on five possible preventive measures of Creative Accounting. (5 Marks)

Answer

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Tags: Corporate Governance, Creative Accounting, Ethics, Financial Statements, Window Dressing
Level: Level 3

Topic: Ethical Issues in Corporate Reporting
Series: NOV 2016

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

Question

Question:

a. Discuss and provide examples of the types of non-financial, ethical, and environmental issues that might influence the objectives of companies. Consider the impact of these non-financial, ethical, and environmental issues on the achievement of primary financial objectives such as the maximisation of shareholder wealth. (12 Marks)

b. Discuss generally, the nature of the financial objectives that may be set in a not-for-profit organisation such as a charity or a hospital. (8 Marks)

Answer

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Tags: Environmental Issues, Ethics, Financial Goals, Non-financial objectives, Not-for-profit organizations, Shareholder Wealth
Level: Level 3

Topic: Ethical issues in financial management

AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

Question

The tendency of an auditor not to believe management assertions unless they provide evidence to support the assertions is described as professional……………………..

Answer

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Tags: Audit Standards, Ethics, Skepticism
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2013

CR – May 2021 – L3 – Q1b – Ethical Issues in Corporate Reporting

Discuss ethical issues in reclassifying proceeds from plant sales and loan notes to operating cash flows.

Question

The Directors of Feedme Limited Group suggested reclassifying proceeds from sales of plant and equipment and loan notes as part of cash generated from operating activities to present the group’s cash health more favorably to shareholders during the next Annual General Meeting (AGM). Discuss the ethical issues involved and how the group accountant should handle the situation in line with the ICAN Code of Professional Ethics.

Answer

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Tags: Corporate Reporting, Ethics, Financial Integrity, ICAN Code
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

CR – May 2021 – L3 – Q3c – Ethical Dilemmas and Actions for a Finance Director

Discuss the ethical dilemmas and potential actions a finance director must take to avoid breaching IFAC's Code of Ethics.

Question

You are the Finance Director of a limited liability company. The company started trading with a handful of employees but now has a workforce of 200. You are aware that staff purchases of goods manufactured by the company are authorised by production managers and then processed outside the accounting system. The proceeds from these sales are used to fund the company’s annual Christmas party, organised for Directors of the company.

Required:
Discuss the possible actions that you will take in order not to breach the fundamental principles of the IFAC’s Code of Ethics. (10 marks)

Answer

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Tags: Conflict of Interest, Ethics, IFAC Code of Ethics, Integrity, Objectivity
Level: Level 3

Topic: Regulatory Framework and Ethics
Series: MAY 2021

FR – May 2020 – L2 – Q5a – Ethical Dilemmas in Tendering Process

This question focuses on the ethical course of action in tendering when faced with insider information in the internal audit context.

Question

Mrs. Stella Amoah (Stella), a Chartered Accountant and Head of Internal Audit in Ningo Communications Authority (NCA), is about to tender for a contract in Internal Audit Service. A new member of her team, Mr. Stephen Appiah Coker (Stephen), has been recruited from the Internal Audit Service, where he previously worked in the department responsible for devising the tender contract. Although Stephen was not involved with the tender process, his former colleague and friend is responsible for the tender specification document and the evaluation process.

Stephen had sight of some of the requirements and has offered to share with Stella information that may be of use when preparing the tender. However, this information is confidential and should not be seen by any of the tendering parties.

It will be an open tender process for both external and internal providers. Bids from external providers are being encouraged. The evaluation process has been designed with this in mind. If the contract is awarded externally, Stella will be unsure of her personal position in the organization. She understands that using any insider knowledge of the tendering process would be inappropriate when preparing the tender proposal, but she feels she would have a better chance of success if she used this confidential information.

Required:
Advise Mrs. Stella Amoah on THREE (3) courses of action she should take in order to act ethically in the tendering process given in the above scenario.

Answer

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Tags: Confidentiality, Ethics, Internal Audit, Professional Responsibility, Tender Process
Level: Level 2

Topic: Professional and Ethical Considerations, Professional and Ethical Issues in Financial Reporting

SCS – Nov 2019 – L3 – Q2d – Ethics and social responsibility

Discuss the ethical operations of Ghanalux and recommend internal controls to enhance customer safety and service.

Question

i) Discuss whether the company is operating in an ethical manner.
(5 marks)

ii) Recommend internal controls that might be implemented by the company to improve customer safety and security, and to deal with the problems of poor service to customers.
(7 marks)

Answer

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Tags: Customer safety, Ethics, Internal Controls, Service Quality
Level: Level 3

Topic: Ethics and social responsibility
Series: NOV 2019

SCS – Aug 2022 – L3 – Q3 – Conflicts of interest and ethical conflict resolution

Explains whistleblowing and what an employee should consider before whistleblowing in Bazar.

Question

“Whistleblowing” means reporting suspicions of illegal or improper behaviour to a person in authority.

Required:
In relation to the comments above, explain to the Director of Human Resources and Organisational Culture, Mrs. Raju Asha, the consequences of comments recorded by an employee. Additionally, advise the employee on what he/she should consider before deciding on “blowing the whistle” and the potential difficulties that the staff might encounter.

Answer

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Tags: Corporate Governance, Ethics, Reporting, Unethical Behavior, Whistleblowing
Level: Level 3

Topic: Conflicts of Interest and Ethical Conflict Resolution
Series: AUG 2022

SCS – Nov 2021 – L3 – Q8 – Professional practice and codes of ethics

Discuss the merits and demerits of the rules-based approach versus the principles-based approach to setting ethical standards.

Question

COM has not had any serious corporate governance issues that have raised concerns as to potential ethical conflicts. However, the Board of Directors has raised concerns about the fact that the Finance department does not have a separate code of conduct in view of the risks associated with their work. Some are proposing a rules-based approach instead of a principles-based approach.

Required:
The CEO has approached you as a Finance professional and a friend to assist him in guiding the Board since the issue was not discussed exhaustively and there is the likelihood that the matter would be part of the next Board meeting. Write a report discussing the merits and demerits of both rules-based approach and a principles-based approach to setting ethical standards.

Answer

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Tags: Corporate Governance, Ethical Standards, Ethics, Finance Department, Principles-Based Approach, Rules-Based Approach
Level: Level 3

Topic: Professional practice and codes of ethics
Series: NOV 2021

SCS – Dec 2022 – L3 – Q6b – Ethics and social responsibility

Analysis of child labour using deontological and teleological ethical theories.

Question

The Board chairman and the CEO have disagreed on whether the use of child labour by the distributors and continuous supply of the company’s products to the affected distributors is ethically wrong. The two have approached you as an expert in ethics to determine which of the positions is correct.

Required:

Using the two main theories of ethics, deontological theory and teleological theory, determine whether child labour is ethically wrong. (10 marks)

Answer

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Tags: child labour, Corporate Social Responsibility, deontological theory, Ethics, teleological theory
Level: Level 3

Topic: Ethics and social responsibility
Series: DEC 2022

SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Explain five reasons why the Director of Finance and Operations might project finance over other functions.

Question

Some of the SavvyTech plc management team is concerned that the Director of Finance and Operations is domineering during the acquisition engagement processes at meetings. The Director of Finance and Operations mentioned in anger that ‘arguably, accountancy has an influence on business and government and that is both:
i) continuous and
ii) more extensive than any other profession’.

Required:
As a newly qualified Chartered Accountant responsible for code of ethics in SavvyTech plc, identify and explain FIVE (5) reasons in support of why the Director of Finance and Operations seems to be projecting finance over other functions.

Answer

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Tags: Decision Making, Ethics, Finance Leadership, Influence
Level: Level 3

Topic: Professional practice and codes of ethics
Series: JULY 2023

SCS – March 2023 – L3 – Q1 – Ethics and social responsibility

Explains the importance of good ethical behavior for accountants and reasons for the public’s high expectations from the accountancy profession.

Question

a) At LCH, the Financial Accountant and the Internal Auditor have been designated as Ethics Focal Persons (EFP) to raise awareness of good ethical behavior among the staff.
As a student of ethics, explain FIVE (5) reasons why good ethical behavior (study and application of ethics) is important to today’s Accountant.
(5 marks)

b) The general public has high expectations of the accountancy profession and the idea of an ethical profession should be reinforced in their minds.
State THREE (3) reasons why the general public has high expectations of the accountancy profession to ensure good corporate governance practices.
(5 marks)

Answer

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Tags: Corporate Governance, Ethics, Professional Conduct, Public Expectations
Level: Level 3

Topic: Ethics and social responsibility
Series: MAR 2023

BMF – Nov 2021 – L1 – SB – Q6C – Business and Organizational Structures and Choices

This question asks candidates to state and explain six values organizations should adopt to promote ethical principles.

Question

In order to put the fundamental principles of ethics into practice, organizations need to adopt values that promote adherence to these principles.

State and explain SIX of these values.

Answer

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Tags: Adherence, Business values, Ethical Principles, Ethics
Level: Level 1

Topic: Business and Organizational Structures and Choices
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Question about identifying an act that cannot be categorized under NOCLAR.

Question

Which of the following CANNOT be categorized as an act of Non-Compliance with Laws and Regulations (NOCLAR)?

A. Bribery
B. Whistleblowing
C. False accounting
D. Fraudulent practice
E. Mutilated financial records

Answer

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Tags: Ethics, Laws and regulations, Non-compliance
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2021

Question Tag: Ethics

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CR – Nov 2024 – L3 – Q5b – Financial Performance & Digital Technology Integration

Evaluating the financial performance of Nsawkaw PLC and addressing challenges of digital technology integration in accounting.

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AAA – Nov 2024 – L3 – Q1a – Ethical Issues in Audit Engagements

Ethical issues and professional conduct in an audit engagement involving conflict of interest.

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MA – Nov 2024 – L2 – Q2b – Ethical Standards in Business

Explanation of the need for ethical standards in business with reference to threats to ethical behavior.

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FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Required:

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FM – Nov 2024 – L2 – Q1b – Ethical Issues in Financial Management

Discuss four ethical issues in financial management and their impact on decision-making.

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AAA – May 2016 – L3 – Q2a – Ethical Issues in Auditing

Discuss the importance of ethical guidance for accountants in addressing money laundering concerns.

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CR – Nov 2016 – L3 – SC – Q5 – Ethical Issues in Corporate Reporting

Explain the concepts of creative accounting and window dressing, provide examples, reasons, and suggest preventive measures.

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FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

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AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

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CR – May 2021 – L3 – Q1b – Ethical Issues in Corporate Reporting

Discuss ethical issues in reclassifying proceeds from plant sales and loan notes to operating cash flows.

You're reporting an error for "CR – May 2021 – L3 – Q1b – Ethical Issues in Corporate Reporting"

CR – May 2021 – L3 – Q3c – Ethical Dilemmas and Actions for a Finance Director

Discuss the ethical dilemmas and potential actions a finance director must take to avoid breaching IFAC's Code of Ethics.

You're reporting an error for "CR – May 2021 – L3 – Q3c – Ethical Dilemmas and Actions for a Finance Director"

FR – May 2020 – L2 – Q5a – Ethical Dilemmas in Tendering Process

This question focuses on the ethical course of action in tendering when faced with insider information in the internal audit context.

You're reporting an error for "FR – May 2020 – L2 – Q5a – Ethical Dilemmas in Tendering Process"

SCS – Nov 2019 – L3 – Q2d – Ethics and social responsibility

Discuss the ethical operations of Ghanalux and recommend internal controls to enhance customer safety and service.

You're reporting an error for "SCS – Nov 2019 – L3 – Q2d – Ethics and social responsibility"

SCS – Aug 2022 – L3 – Q3 – Conflicts of interest and ethical conflict resolution

Explains whistleblowing and what an employee should consider before whistleblowing in Bazar.

You're reporting an error for "SCS – Aug 2022 – L3 – Q3 – Conflicts of interest and ethical conflict resolution"

SCS – Nov 2021 – L3 – Q8 – Professional practice and codes of ethics

Discuss the merits and demerits of the rules-based approach versus the principles-based approach to setting ethical standards.

You're reporting an error for "SCS – Nov 2021 – L3 – Q8 – Professional practice and codes of ethics"

SCS – Dec 2022 – L3 – Q6b – Ethics and social responsibility

Analysis of child labour using deontological and teleological ethical theories.

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SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Explain five reasons why the Director of Finance and Operations might project finance over other functions.

You're reporting an error for "SCS – July 2023 – L3 – Q6a – Professional Practice and Codes of Ethics"

SCS – March 2023 – L3 – Q1 – Ethics and social responsibility

Explains the importance of good ethical behavior for accountants and reasons for the public’s high expectations from the accountancy profession.

You're reporting an error for "SCS – March 2023 – L3 – Q1 – Ethics and social responsibility"

BMF – Nov 2021 – L1 – SB – Q6C – Business and Organizational Structures and Choices

This question asks candidates to state and explain six values organizations should adopt to promote ethical principles.

You're reporting an error for "BMF – Nov 2021 – L1 – SB – Q6C – Business and Organizational Structures and Choices"

BMF – Nov 2021 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Question about identifying an act that cannot be categorized under NOCLAR.

You're reporting an error for "BMF – Nov 2021 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society"

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