i) Ethical Conflict Resolution Using the IFAC Model:

1. Identify threats to compliance with fundamental principles: For example, threats to integrity when preparing favorable financial projections.
2. Evaluate the threat: Assess both qualitative and quantitative factors; insignificant threats can be ignored, but significant ones need action.
3. Respond to the threat: Apply appropriate safeguards, such as discussing concerns with management. If threats cannot be mitigated, decline the assignment.
4. Consultation and documentation: If necessary, consult with professional bodies for advice and document all decisions.
   (5 marks)

ii) Transaction Risk Assessment:

1. Transaction risk arises when GGOH’s loan is in USD while their revenue is primarily in GHS. A shift in exchange rates between the GHS and USD could increase the loan repayment cost.
2. If the USD strengthens against the GHS, the cost of repaying the loan in GHS will increase, leading to higher financial strain on GGOH.
3. Example calculation:
   • Assume GGOH’s loan is $3,500,000 and the exchange rate increases from GHS 5.70 to GHS 6.10 per USD.
   • Original repayment: $3,500,000 * GHS 5.70 = GHS 19,950,000.
   • New repayment: $3,500,000 * GHS 6.10 = GHS 21,350,000.
   • The difference of GHS 1,400,000 represents the additional cost due to exchange rate fluctuations.
     (5 marks)