Question 1. Find a list of scenarios of Ethics and Standards of practice in Table 5. In
Question:
Question 1.
Find a list of scenarios of Ethics and Standards of practice in Table 5. In each case list the standard applicable for example Standard I (D) Misconduct. Then state if there has been a violation or not and a reason for your answer. (8)
5.1 James Smith is a retired equities trader who manages his portfolio. He owns shares in a large local bank, ABC Bank. A close friend John Spear, is a senior executive at ABC Bank. ABC has seen its share price drops considerably, and the news and outlook are not good. In a conversation about the economy and the banking industry over lunch, John relays the information that ABC will surprise the investment community in a few days when it announces excellent earnings for the quarter. James is pleasantly surprised by this information - he doubles his position in the bank. Subsequently, ABC announces that it had good operating earnings but had to set aside reserves for anticipated significant losses on its loan portfolio. The combined news causes the share to go down 60%.
5.2 Jana Joko, an equity analyst at Typo a large broking firm, submits reimbursement forms over two years to Typo's self-funded health insurance program for bills, most of which have been changed to increase the amount due. An investigation by the firm's director of employee benefits uncovers inappropriate conduct.
5.3 Kyle Komo directs a large amount of his commission business to a New York-based brokerage house. In appreciation for all the business, the brokerage house gives Kyle a few bottles of wine. In addition, they give him two tickets to the World Cup in South Africa, two nights at a nearby resort, several meals, and transportation via limousine to the game. Kyle discloses receiving a gift from the brokerage house to the value of the wine to his supervisor.
5.4 Kingsley Bumm is a performance analyst for Tromp Investment Funds. Kingsley believes that the portfolio manager for the firm's small- and microcap equity fund dislikes him because the manager never offers him tickets to the local rugby team's games but does offer tickets to other employees. To incite a potential regulatory review of the manager, Kingsley creates user profiles on several online forums under the portfolio manager's name and starts rumors about potential mergers for several of the smaller companies in the portfolio. As the prices of these companies' shares increase, the portfolio manager sells the position, which leads to an investigation by the regulator as Kingsley desired.
Question two
The following is the trial balance of KSmooth as at 31 March 2002. Draw up a set of
final accounts for the year ended 31 March 2002.
Dr Cr
Stock 1 April 2001
Sales
Purchases
Carriage inwards
Carriage outwards
Returns outwards
Wages and salaries
Rent and rates
Communication expenses
Commissions payable
Insurance
Sundry expenses
Buildings
Debtors
Sh.
1,816,000
6,918,500
42,000
157,000
1,024,000
301,500
62,400
21,600
40,500
31,800
2,000,000
1,432,000
Sh.
9,234,000
64,000
98Creditors
Fixtures
Cash at bank
Cash in hand
Drawings
Capital
285,000
297,000
11,500
762,000
152,028
816,000
5,088,800
152,028
Expert Answer:
ANSWER For Question 1 51 Standard Standard VA Diligence and Reasonable Basis Violation Yes Reason James Smith upon receiving insider information from his friend should have refrained from trading base... View the full answer
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
