Topic: Ethical Issues in Corporate Reporting

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CR – May 2015 – L3 – Q6 – Ethical Issues in Corporate Reporting

Analyze the financial reporting needs and efficiency challenges of not-for-profit organizations, including asset valuation at cost vs. fair value.

Question

NICE & DICE

NICE & DICE is a large charity located in Abuja and set up to provide support and assistance to disadvantaged people in major cities. Most of the charity’s income comes from members of the public through direct cash collections and regular monthly payments from donors. The other source of funding comes from government bodies who give grants to support specific projects that are recognized as being beneficial to the public good.

The charity publishes a detailed annual report. Performance is described largely in terms of an analysis of income received and the manner in which it has been spent. The trustees are concerned that this type of analysis does not really reflect the performance of the charity. They would like to report performance in terms of the work done rather than in terms of cash inflows and outflows. They want donors to appreciate how efficient the charity is.

The statement of financial position of the charity is a typical one for a large organization. NICE & DICE owns numerous properties in Abuja, some of which have been owned for many years. These are shown at historical cost less depreciation. The trustees do not wish to revalue the properties because this will create the impression that the charity is wealthy and that it does not require further financial support.

Required:
(a) Prepare a report to the trustees of Nice & Dice advising them on the reasons why specialized entities are required to publish detailed information about their activities. (5 Marks)
(b) Analyze the problems of quantifying and reporting the efficiency of not-for-profit organizations such as Nice & Dice. (5 Marks)
(c) Discuss the decision of the trustees to value its properties at cost less depreciation rather than at fair value. (5 Marks)

Answer

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Tags: Charity Reporting, Efficiency Measurement, Fair Value, Historical Cost, Not-for-Profit Reporting
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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

CR – May 2017 – L3 – Q5c – Ethical Issues in Corporate Reporting

Identify the contents of a corporate governance report in annual reports of quoted companies.

Question

Institutional investors, if not all investors, need information about corporate governance in order to make rational and reasonable investment decisions. As such, the Securities and Exchange Commission (SEC) of Nigeria requires that the annual reports of all quoted companies should include a corporate governance report.

Required:
Identify the contents of such a corporate governance report. (5 Marks)

Answer

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Tags: Annual Reports, Corporate Governance, Investment decisions, SEC Nigeria
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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 – Q7a – Ethical Issues in Corporate Reporting

Discuss unethical organizational acts and recommend the actions the Chief Accountant should take in a scenario of misrepresentation in financial reporting.

Question

Femmy PLC operates in a city where a major insurance company has just announced a restructuring that will lay off 4,000 employees. For Femmy PLC, accounts receivable represents one of the major assets of the company. Although the company’s annual uncollectible accounts are not out of line, they are material in size. The company is about to submit its application for a bank loan. Sales and net income have declined in the past year, and some customers are falling behind in settling their accounts.

A steady financial performance is necessary to be able to secure the anticipated bank loan. Therefore, management felt there is the need to underestimate the uncollectible accounts this year to show a small growth in earnings. They believe that future successful years will average out the losses.

More so, since the company has a history of success, the adjustments are seen as mere accounting measures and estimates. The Chief Accountant viewed management’s action as unethical.

Required:
i. Discuss the meaning of unethical acts by organizations. (5 Marks)
ii. What should the Chief Accountant do under this circumstance? (5 Marks)

Answer

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Tags: Earnings Management, Financial Reporting Ethics, Professional Ethics, Unethical Accounting Practices
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

CR – May 2023 – L3 – Q6b – Ethical Issues in Corporate Reporting

Discuss the ethical implications and possible actions for alleged unethical behavior in a corporate takeover.

Question

On your first day at Omoge Nigeria Plc as the Chief Financial Officer (CFO) of the company, you were sitting in the staff canteen where you overheard a conversation between two Admin Officers. They were gossiping about Mr. Adamu Salisu, the Finance Director.

According to their conversation, Mr. Adamu Salisu may have been involved in unethical activities related to Omoge Nigeria Plc’s takeover of Bobo Limited.

Key details include:

Mr. Salisu’s wife, Mrs. Salisu, was a director at Bobo Limited prior to the takeover and owned 30% of its shares.
It is alleged that Mr. Salisu substantially overpaid for Bobo Limited and facilitated the overpayment to benefit his wife.
The alleged unethical act involved colluding with his wife to falsify records submitted to the accountant conducting due diligence for the takeover.
Mr. Salisu is reportedly not well-liked by staff, who consider him intimidating and appear pleased at the prospect of him losing his job.

Required:

Discuss the ethical implications of the above and the possible actions that may arise from the incident. (5 Marks)

Answer

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Tags: Conflict of Interest, Corporate Governance, Ethics, Professional Integrity
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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

Provide definitions, examples, reasons, and preventive measures for Creative Accounting and Window Dressing.

Question

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

You are required to write a report to the management of Wastage Plc. Your report should include:

a. Definitions of the TWO concepts. (2 Marks)
b. FIVE examples of each. (5 Marks)
c. THREE possible reasons for Creative Accounting and Window Dressing. (3 Marks)
d. Advise to management on FIVE possible preventive measures of Creative Accounting. (5 Marks)

Answer

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Tags: Creative Accounting, Ethical Standards, Financial Statements, Fraud Prevention, Window Dressing
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

CR – Nov 2022 – L3 – Q6 – Ethical Issues in Corporate Reporting

Evaluate ethical threats and recommend safeguards in corporate reporting practices.

Question

Compliance with the fundamental ethical principles may potentially be threatened by a broad range of circumstances. It is expected for professional members to evaluate identified threats and put up enough safeguards as appropriate responses to such threats. Unless any threat is clearly insignificant, members must implement safeguards to eliminate the threats or reduce them to an acceptable level so that compliance with the fundamental principles is not compromised. Many threats fall into the following categories:

i. Self-interest;
ii. Self-review;
iii. Advocacy;
iv. Familiarity; and
v. Intimidation.

Required:
a. Evaluate two circumstances which may give rise to each of the categories of threats enumerated above. (10 Marks)
b. Recommend two safeguards to eliminate or reduce the threats to an acceptable level. (5 Marks)
(Total 15 Marks)

Answer

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Tags: Advocacy, Ethical Threats, Intimidation, Safeguards, Self-Interest
Level: Level 3

Topic: Ethical Issues in Corporate Reporting
Series: NOV 2022

CR – May 2015 – L3 – Q6 – Ethical Issues in Corporate Reporting

Analyze the financial reporting needs and efficiency challenges of not-for-profit organizations, including asset valuation at cost vs. fair value.

Question

NICE & DICE

Answer

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Tags: Charity Reporting, Efficiency Measurement, Fair Value, Historical Cost, Not-for-Profit Reporting
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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

Answer

Find Related Questions by Tags, levels, etc.

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

Topic: Ethical Issues in Corporate Reporting
Series: NOV 2016

CR – May 2017 – L3 – Q5c – Ethical Issues in Corporate Reporting

Identify the contents of a corporate governance report in annual reports of quoted companies.

Question

Required:
Identify the contents of such a corporate governance report. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Annual Reports, Corporate Governance, Investment decisions, SEC Nigeria
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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

Answer

Find Related Questions by Tags, levels, etc.

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

Topic: Ethical Issues in Corporate Reporting

CR – May 2021 – L3 – Q7a – Ethical Issues in Corporate Reporting

Discuss unethical organizational acts and recommend the actions the Chief Accountant should take in a scenario of misrepresentation in financial reporting.

Question

More so, since the company has a history of success, the adjustments are seen as mere accounting measures and estimates. The Chief Accountant viewed management’s action as unethical.

Required:
i. Discuss the meaning of unethical acts by organizations. (5 Marks)
ii. What should the Chief Accountant do under this circumstance? (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Earnings Management, Financial Reporting Ethics, Professional Ethics, Unethical Accounting Practices
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

CR – May 2023 – L3 – Q6b – Ethical Issues in Corporate Reporting

Discuss the ethical implications and possible actions for alleged unethical behavior in a corporate takeover.

Question

According to their conversation, Mr. Adamu Salisu may have been involved in unethical activities related to Omoge Nigeria Plc’s takeover of Bobo Limited.

Key details include:

Mr. Salisu’s wife, Mrs. Salisu, was a director at Bobo Limited prior to the takeover and owned 30% of its shares.
It is alleged that Mr. Salisu substantially overpaid for Bobo Limited and facilitated the overpayment to benefit his wife.
The alleged unethical act involved colluding with his wife to falsify records submitted to the accountant conducting due diligence for the takeover.
Mr. Salisu is reportedly not well-liked by staff, who consider him intimidating and appear pleased at the prospect of him losing his job.

Required:

Discuss the ethical implications of the above and the possible actions that may arise from the incident. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Conflict of Interest, Corporate Governance, Ethics, Professional Integrity
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

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

Provide definitions, examples, reasons, and preventive measures for Creative Accounting and Window Dressing.

Question

You are required to write a report to the management of Wastage Plc. Your report should include:

Answer

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Tags: Creative Accounting, Ethical Standards, Financial Statements, Fraud Prevention, Window Dressing
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

CR – Nov 2022 – L3 – Q6 – Ethical Issues in Corporate Reporting

Evaluate ethical threats and recommend safeguards in corporate reporting practices.

Question

i. Self-interest;
ii. Self-review;
iii. Advocacy;
iv. Familiarity; and
v. Intimidation.

Answer

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Tags: Advocacy, Ethical Threats, Intimidation, Safeguards, Self-Interest
Level: Level 3