Tag (SQ): False Accounting

Accountant’s behaviour

The fundamental ethical principles for accountants apply to accountants in business as well as accountants in practice.

(a) A fundamental ethical principle in accountancy is that an accountant should be objective, avoiding bias and undue influence. It seems that Kofi has allowed his friendship with the production director to affect his forecasts of costs, and so he is in breach of the principle of objectivity.

(b) The chairman of the company has purchased some expensive evening gowns for his wife at a Lagos fashion show. He tells Kofi to record the cost of the evening gowns as a company expense, as the cost of new protective clothing for workers in the production department. Kofi does what he has been told.

(c) The managing director asks Kofi if he can construct a spreadsheet model for analysing costs. Kofi has never constructed a spreadsheet model, but he does not want the managing director to give the work to a junior accountant in the department. He therefore says that he can construct the spreadsheet. He thinks that if he takes the work home, his sister will be able to help him: he knows that she is good with spreadsheets and will probably help him if asked.

(d) Kofi attends a party at the weekend where he mentions to a friend that he thinks his company is getting into serious financial trouble because it is about to lose a major contract. The friend later mentions his concerns for Kofi’s future to another person at the party, and explains why Kofi might be about to lose his job. The person that the friend speaks to is a senior manager in a rival company to the company that Kofi works for.