The subject matter here is the unethical directive by the directors to the group accountant to find a way of treating the “proceeds of sales of plant and equipment and issue of loan notes as part of cash generated from operating activities to enhance the cash health of the group and make the shareholders more comfortable at the Annual General Meeting.”

This instruction is in breach of the ICAN code of professional ethics as it contravenes the fundamental principle of integrity, objectivity, professional competence, professional behavior, and due care. Professional behavior and confidentiality must always be displayed no matter the situation a Chartered Accountant finds himself/herself. In line with ICAN code of ethics, Chartered Accountants must behave ethically in order to sustain the trust bestowed on them by the general public.

The group accountant should treat the proceeds from the sales of property, plant and equipment as cash generated from investing activities and those from the issue of loan notes as cash generated from financing activities in line with IAS 7 (statement of cash flows) to reflect Generally Acceptable Accounting Principles and faithful representation being the substance of the transaction.

Accountants should ensure that they do not prepare financial information in a way that is misleading or that does not show a true and fair view of the entity’s operation. They are expected to always try to behave in the right way and continually perform their duties in the best of public interest and not involve in any act that is capable of bringing the institute to disrepute.

The group accountant should arrange a meeting with the directors to remind them that professional accountants are bound by certain fundamental principles as contained in the ICAN Code of Professional Ethics. Should the director further contend with the ideal treatment as prescribed above, the group accountant has an option to consider resignation in line with the ICAN Code of Professional Ethics.

In conclusion, the directors should be sent to attend a professional ethical training if they are so important to the organization for misrepresenting the actual position of cash flow to shareholders.

Accountants should always uphold ethical standards at all times in order to enhance public trust, by presenting the substance of the transaction, upholding fair presentation, and presenting all transactions in line with applicable standards.