BMIS – L1 – SA – Q13.3 – Professional ethics in accounting and business

Identifies unethical conduct in presenting misleading financial reports.

Question

The finance director of a large public company, Zenith Corp, presents a financial report to the board of directors, with a view to the company issuing a statement about its financial prospects to the stock market. The director knows that the information in the report is incorrect and materially misleading. The finance director is acting unethically by failing to comply with the principle of:

A professional competence

B integrity

C technical standards

D professional behaviour

Answer

Explanation:
The correct answer is B, as presenting a financial report known to be incorrect and materially misleading violates the principle of integrity, which requires accountants to be honest and straightforward. The answer document states that the finance director is acting dishonestly/without integrity. Option A (professional competence) is incorrect, as the issue is not about lacking skills but about deliberate misrepresentation. Option C (technical standards) is incorrect, as the violation is ethical rather than technical. Option D (professional behaviour) is related but less specific, as integrity directly addresses the dishonesty in this scenario.

Tags: Dishonesty, Ethics, Financial Reporting, Integrity, Professional conduct
Level: Level 1

Topic: Professional ethics in accounting and business

Uploader: Samuel Duah