Financial Reporting and Ethics - The Institute of Chartered ...

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FINANCIAL REPORTING AND ETHICS(c)(d)AgencyBig and Thompson (1966) define ‘agency’ as “the relationshipbetween the principal and the agent. It is usually, though notnecessarily, created by contract between the principal and agentand is then analogous to, but not identical with, the contractbetween a master and a servant. Apart from any express appointmentof an agent, the law itself may impose the relationship of principaland agent with its attendant consequences as, for instance, wherethe doctrine of agency of necessity is applicable. An agent is aperson having express or implied authority to act on behalfof another person, who is called the principal, with theobject of bringing the principal into legal relations withthird parties” (emphasis mine).According to The Chambers Dictionary (2003), a principal is “aperson who, being sui juris, that is, of legal capacity, employssomeone else to do an act which he or she is competent himselfto do.”Horngren (1982) defines ‘costs’ as “resources sacrificed orforgone to achieve a specific objective. The resources may befinancial or non-monetary.”In Chapter 7.1, it is appreciated that a corporation or company is anartificial legal person which can sue and be sued through its accreditedrepresentatives or agents such as board members, top managementand all the people who “call the shots” in the organisation. The corporateperson has “neither body, mind nor soul.” According to Mary Oliver(1971), “corporations cannot commit treason, nor be outlawed, norexcommunicate, for they have no souls. Although, corporations can sueand be sued in their names, it is the board members and / ormanagement who are natural persons and control the destiny of thecompanies, as agents, who stand for them.All the partners of a partnership are agents for one another; each partnercan bind the others in the course of executing contracts on behalf of thefirm. Each partner is a principal and an agent at the same time. Partnersare in a fiduciary position with each other. “They must not only telleach other the truth in conducting the business, but they must disclosethe whole truth.” (Mary Oliver (1971)). Conclusively, partnershiprelationship is “uberrimae fidei,” that is, of utmost good faith.In a consignment business, the person to whom goods are forwarded orconsigned is an agent. He is a representative of the consignor, in goodfaith, and is expected to behave as an ordinary man of business.214
CORPORATE GOVERNANCEAn agent has implied authority to act as he considers fit for effectivelycarrying out his duties for as long as he does not exceed the extent ofthe power of his principal. By the simple rule of estoppels, a wife is theagent of her husband to the extent that she has been pledging his creditwith identified suppliers and the husband has been settling the bills.11.5.2 Minimising or reducing the threats of agency costs - financialand moral involve the following under-listed actions ordevelopments:(a)Where the principal puts up a highly publicized disclaimer oralerts the suppliers from whom the purported agent collects goodsor services, especially in the case of a wife who commits herhusband, it is the agent who faces the liabilities to the thirtyparties;(b)(c)(d)A company’s agents who transact businesses, in the ordinarycourse of events, include the board members and managingdirectors/chief executive officers. All actions taken by the agentsshould be intra vires, inviolate and protective from expropriation,insider trading or ‘rip-offs’ of the principals, outside investorsand members of the public. Where the story is different from theone stated, the long and enduring hand of the law of the landshould apprehend and punish the officers;Instituting dynamic and forward looking corporate governanceprinciples, as suggested under 10.4.1. Any member of the boardor top management who commits an infraction of any of the laiddown procedures deserves to be shown the way out of thecompany;There should be corporate rules and regulations in codified form,for every employee down the ‘scalar chain’ to adhere to.Infringements should not be spared; and(e) The measures of good governance discussed in Section 10.4.1should be strengthened by the tenets of the Code of CorporateGovernance in Nigeria, 2003 and the pronouncements of theInstitute of Chartered Accountants of Nigeria (ICAN) andInternational Federation of Accountants (IFAC). The twopublications are discussed fully under Section 10.9.1, “RegulatoryFramework for Corporate and Enterprise Governance.” A memberof The Institute of Chartered Accountants of Nigeria who infringesany of the indices of ethical code of conduct is severely dealt with.215
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FINANCIAL REPORTING AND ETHICS1.3.3
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ACCOUNTING AND REPORTING POLICIESsu
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ACCOUNTING AND REPORTING POLICIES(j
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ACCOUNTING AND REPORTING POLICIES(i
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ACCOUNTING AND REPORTING POLICIES2.
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3AMALGAMATION, ABSORPTION ANDRECONS
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AMALGAMATION, ABSORPTION AND RECONS
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4ANALYSIS AND INTERPRETATION TION O
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ANALYSIS AND INTERPRETATION OF FINA
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5ACCOUNTING STANDARDS5.0 LEARNING O
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ACCOUNTING STANDARDS(i)(ii)(iii)(iv
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ACCOUNTING STANDARDSThere is no SAS
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ACCOUNTING STANDARDS5.2.4 Borrowing
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ACCOUNTING STANDARDS(iii)Certain pe
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ACCOUNTING STANDARDSby venture capi
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ACCOUNTING STANDARDSIFRS 7 Financia
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ACCOUNTING STANDARDSactivity, non-c
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ACCOUNTING STANDARDSin the year inc
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ACCOUNTING STANDARDS(v)(vi)(vii)whe
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ACCOUNTING STANDARDS(v)Actions requ
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ACCOUNTING STANDARDSAccounting stud
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6ETHICAL FRAMEWORK, CONCEPTSAND VAL
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ETHICAL FRAMEWORK, CONCEPTS AND VAL
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7THE ENVIRONMENT: CORPORATE,PROFESS
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THE ENVIRONMENT: CORPORATE, PROFESS
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Page 171 and 172: 8PROFESSIONAL ETHICS8. 0 LEARNING O
Page 173 and 174: PROFESSIONAL ETHICSobjectivity are
Page 175 and 176: PROFESSIONAL ETHICS(c)(d)The type o
Page 177 and 178: PROFESSIONAL ETHICSabout conflicts
Page 179 and 180: PROFESSIONAL ETHICS(d)(e)Confidenti
Page 181 and 182: PROFESSIONAL ETHICSA. III onlyB. II
Page 183 and 184: 9DECISION MAKING IN ETHICS9. 0 LEAR
Page 185 and 186: DECISION MAKING IN ETHICS9.2 A FRAM
Page 187 and 188: ETHICAL THREATS AND SAFEGUARDS(d)We
Page 189 and 190: DECISION MAKING IN ETHICS4. A perso
Page 191 and 192: 10ETHICAL THREATS TS AND SAFEGUARDS
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Page 195 and 196: ETHICAL THREATS AND SAFEGUARDSto th
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Page 201 and 202: ETHICAL THREATS AND SAFEGUARDSimmin
Page 203 and 204: ETHICAL THREATS AND SAFEGUARDSHowev
Page 205 and 206: ETHICAL THREATS AND SAFEGUARDS(iii)
Page 207 and 208: 11CORPORATE GOVERNANCE11.0 LEARNING
Page 209 and 210: CORPORATE GOVERNANCE11.3.1 Nature(a
Page 211 and 212: CORPORATE GOVERNANCEThe company sho
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Page 219 and 220: CORPORATE GOVERNANCE11.6.1 The law
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Page 223 and 224: CORPORATE GOVERNANCEimitated. They
Page 225 and 226: CORPORATE GOVERNANCE(a)(b)Greenbury
Page 227 and 228: CORPORATE GOVERNANCE11.9.2 Boards d
Page 229 and 230: CORPORATE GOVERNANCErelationship wi
Page 231 and 232: CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
Page 233 and 234: CORPORATE GOVERNANCE(vi)Inquisitive
Page 235 and 236: CORPORATE GOVERNANCE(e)ConsultancyA
Page 237 and 238: CORPORATE GOVERNANCEThe incoming au
Page 239 and 240: CORPORATE GOVERNANCEIn summary, acc
Page 241 and 242: CORPORATE GOVERNANCEAccording to Th
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Page 245 and 246: 12SOCIAL AND ENVIRONMENTALISSUES IN
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SUGGESTED SOLUTIONS TO REVISION QUE
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SUGGESTED SOLUTIONS TO REVISION QUE
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APPENDIX IICOMPREHENSIVE QUESTIONS
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COMPREHENSIVE QUESTIONS AND SUGGEST
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APPENDIX IIICASE STUDY 1Karsashi, a
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CASE STUDIES(iii)(iv)The floor sale
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CASE STUDIESShare price and dividen
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CASE STUDIESSUGGESTED SOLUTION(A) A
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CASE STUDY 3The following informati
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CASE STUDIESCASE STUDY 4Ologobojo i
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APPENDIX IVTable 1:SUMMARY OF INTER
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SUMMARY OF INTERNATIONAL ACCOUNTING
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APPENDIX VGLOSSARY OF TERMSAbsorpti
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GLOSSARY OF TERMSEthical Objectivis
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APPENDIX VIBIBLIOGRAPHYChambers Ham
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APPENDIX VIISTUDY AND EXAMINATION T
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STUDY AND EXAMINATION TECHNIQUES7.3
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INDEXAAbsorption, 17, 19, 39, 40, 4
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INDEXProfessional Behaviour, 136, 1
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