AccountantSea has recently increased its long-term borrowings to fund the acquisition of two new cruise ships....

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AccountantSea has recently increased its long-term borrowings to fund the acquisition of two new cruise ships. The bank approved the increase subject to a debt covenant of maintaining a debt-equity ratio of 0.5 or less. The board of directors is concerned because AccountantSea must also provide for upgrades on all existing cruise ships to comply with the new Protocols of Operational Compliance in Cruise Liners. This may impact its debt-equity ratio for the year ended 31 December 2022, taking it above the maximum allowed by the bank. To avoid exceeding the maximum debt-equity ratio of 0.5, the board wants to delay recording a provision for the upgrades to 2023. The Chief Financial Officer (CFO), keen to keep the board happy, has instructed you to prepare the financial statements for the year ended 31 December 2022 without including a provision for the upgrades. You raised with the CFO that excluding the provision would not be in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets (IAS 37). However, he told you not to ask any more questions. You are now considering assigning this work to a junior staff member who does not have experience working with IAS 37. Required - Task 3 Identify and explain two (2) key ethical principles at risk for you. Your response to Task 3 will form part of the 1,000-word limit for your written submission. AccountantSea has recently increased its long-term borrowings to fund the acquisition of two new cruise ships. The bank approved the increase subject to a debt covenant of maintaining a debt-equity ratio of 0.5 or less. The board of directors is concerned because AccountantSea must also provide for upgrades on all existing cruise ships to comply with the new Protocols of Operational Compliance in Cruise Liners. This may impact its debt-equity ratio for the year ended 31 December 2022, taking it above the maximum allowed by the bank. To avoid exceeding the maximum debt-equity ratio of 0.5, the board wants to delay recording a provision for the upgrades to 2023. The Chief Financial Officer (CFO), keen to keep the board happy, has instructed you to prepare the financial statements for the year ended 31 December 2022 without including a provision for the upgrades. You raised with the CFO that excluding the provision would not be in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets (IAS 37). However, he told you not to ask any more questions. You are now considering assigning this work to a junior staff member who does not have experience working with IAS 37. Required - Task 3 Identify and explain two (2) key ethical principles at risk for you. Your response to Task 3 will form part of the 1,000-word limit for your written submission.

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There are two key ethical principles at risk for the situation described Integrity Integrity refers to the principle of being honest and transparent in decision making and actions By excluding the pro... View the full answer