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

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FINANCIAL REPORTING AND ETHICSMay= 4,32012,300x 100 = 35.1%(B)From: Audit ManagerTo: PartnerSubject: The Ice-cream parlour (year ended 31st May 2008)Our Client’s trading account for the year ended 31st May 2008 is as follows:NSales 144,000Cost of Sales 90,720Gross Profit 53,280The result of this trading account shows a gross profit of 37%, which when compared to theindustry average of 40%, has a short fall of 3%.The effect of this difference indicates that sales of approximately N7,200 have been omittedfrom the records. That is, 90,720/0.6 less 144,000 = 7,200. The total cost of N90,720needsto be analysed into its constituent parts and the sales estimate based on that analysis.Purchase invoices will need to be obtained for this purpose and sales mix compared withthat of other companies in the same industry. There could be a reconciliation of physicalstock movements to identify whether there has been any misallocation of sales to producttype.Yours faithfully,Aminu Ranger284
CASE STUDY 3The following information was extracted from the balance sheet of BMA plc, a companynewly quoted on the second tier security market.N’000Total fixed assets (As at 31st December 2008) 10,000Closing Stock (As at 31st December 2008) 1,000A financial analyst interested in investing in the company computed the following ratiosin respect of the company for the year ended 31st December 2008:Gross profit margin 25%Net profit/sales 20%Stock turnover ratio10 timesNet profit/capital 20%Closing capital to total liabilities 50%Fixed asset/capital 5:4Fixed asset/total current assets 5:7Required:With the information available, your Managing Director has asked you to prepare thetrading, profit and loss account for the year ended 31 st December, 2008 and a balancesheet as at that date.SUGGESTED SOLUTIONBMA PLCTrading, Profit and Loss Account for the year ended 31st December 2008N’000 N’000Sales (wk1) 8,000Opening Stock (wk 2 & 3) 200Purchases 6,800Closing Stock (1,000)Cost of Sales (wk 4)(6,000)Gross Profit (wk 5) 2,000Expenses (400)Net profit (wk 6) 1,600Balance Sheet as at 31st May, , 2008N’000 N’000Fixed Assets 10,000Current Assets (wk 7):Stock 1,000Other current assets (wk 8) 13,000Total current assets 14,000Less Current Liabilities (wk 9) (16,000)Net current assets (2,000)Net Assets 8,000Financed By:Opening Share Capital 6,400Net Profit 1,600Closing Capital (wk 10): 8,000285
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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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8PROFESSIONAL ETHICS8. 0 LEARNING O
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PROFESSIONAL ETHICSobjectivity are
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PROFESSIONAL ETHICS(c)(d)The type o
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PROFESSIONAL ETHICSabout conflicts
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PROFESSIONAL ETHICS(d)(e)Confidenti
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PROFESSIONAL ETHICSA. III onlyB. II
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9DECISION MAKING IN ETHICS9. 0 LEAR
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DECISION MAKING IN ETHICS9.2 A FRAM
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ETHICAL THREATS AND SAFEGUARDS(d)We
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DECISION MAKING IN ETHICS4. A perso
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10ETHICAL THREATS TS AND SAFEGUARDS
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ETHICAL THREATS AND SAFEGUARDS(iv)(
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ETHICAL THREATS AND SAFEGUARDSto th
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ETHICAL THREATS AND SAFEGUARDSpayab
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ETHICAL THREATS AND SAFEGUARDS(a)Fi
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ETHICAL THREATS AND SAFEGUARDSimmin
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ETHICAL THREATS AND SAFEGUARDSHowev
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ETHICAL THREATS AND SAFEGUARDS(iii)
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11CORPORATE GOVERNANCE11.0 LEARNING
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CORPORATE GOVERNANCE11.3.1 Nature(a
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CORPORATE GOVERNANCEThe company sho
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CORPORATE GOVERNANCEtrust, possible
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CORPORATE GOVERNANCE(a)(b)(c)(d)(e)
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CORPORATE GOVERNANCE11.6.1 The law
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CORPORATE GOVERNANCEimitated. They
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CORPORATE GOVERNANCE(a)(b)Greenbury
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CORPORATE GOVERNANCE11.9.2 Boards d
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CORPORATE GOVERNANCErelationship wi
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CORPORATE GOVERNANCE(e)(f)(g)(h)(i)
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Page 245 and 246: 12SOCIAL AND ENVIRONMENTALISSUES IN
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Page 269 and 270: APPENDIX IICOMPREHENSIVE QUESTIONS
Page 271 and 272: COMPREHENSIVE QUESTIONS AND SUGGEST
Page 277 and 278: APPENDIX IIICASE STUDY 1Karsashi, a
Page 279 and 280: CASE STUDIES(iii)(iv)The floor sale
Page 281 and 282: CASE STUDIESShare price and dividen
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Page 291 and 292: SUMMARY OF INTERNATIONAL ACCOUNTING
Page 293 and 294: APPENDIX VGLOSSARY OF TERMSAbsorpti
Page 295 and 296: GLOSSARY OF TERMSEthical Objectivis
Page 297 and 298: APPENDIX VIBIBLIOGRAPHYChambers Ham
Page 299 and 300: APPENDIX VIISTUDY AND EXAMINATION T
Page 301 and 302: STUDY AND EXAMINATION TECHNIQUES7.3
Page 303 and 304: INDEXAAbsorption, 17, 19, 39, 40, 4
Page 305 and 306: INDEXProfessional Behaviour, 136, 1
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