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

FINANCIAL REPORTING AND ETHICSQUESTION 5Aristotle insists that every situation has four factors which brings it into existence in his VirtueEthics Theory. Discuss the four factors.SUGGESTED SOLUTION TO QUESTION 5The factors or causes are:(a)(b)(c)(d)Material Causes: The material cause of a thing or object is the actual physical materialwhich makes it what it is. Aristotle draws from his point or theory of teleology whichassumes that everything has a purpose or that the ultimate result of a particular action isall the important consideration. For example, the science of chemistry tells us that water ismade from two molecules of hydrogen and one of oxygen. Consequently, it can be statedthat the material cause of water is hydrogen and oxygen.(6 Marks)Efficient Creative Fororce or Cause. The creative force or efficient cause is that whichhas brought the object into being or existence. According to Aristotle, the efficient creativeforce of a goat is its parents. Later, however, religious beliefs and traditions which Aristotleinspired substituted God as the efficient creative force or cause. (3 Marks)Formal cause. Just as Plato, Aristotle, postulates that it is in this world that true reality isfound, with the intellectual perspective. For example, a successfully baked bread displaysthe perfect form of a piece of bread, through the use of man’s mortal sense of appreciation.(2 Marks)Final Cause. Final cause illuminates the understanding of the purpose of a thing - itsattributes, nature and qualities. According to this concept, the nature of a thing is not fullyappreciated until its purpose is understood. As long as the object achieves itspre-determined potential, it is a success. Nature or the achieved end, therefore, becomesthe ‘final cause’ sought.(4 Marks)Total (15 Marks)QUESTION 6The Code of Ethics for professional Accountants of July 2009 issued by the International Federationof Accountants stipulates five fundamental principles, under Section 100.5, which a professionalaccountant should comply with. You are required to briefly discuss the fundamental principles.(15 Marks)SUGGESTED SOLUTION TO QUESTION 6The fundamental principles are discussed, as follows:(a)(b)(c)Integrity: The attribute requires a professional accountant to be straightforward andhonest in all his professional and commercial relationships.Objectivity: He should not allow bias, undue influence or conflict of interests of others tooverride his business or professional judgments.Professional Behaviour: A professional accountant should exhibit the characteristicsof adherence to the relevant laws and regulations. He should avoid actions which wouldtarnish the good name of the profession.272