The following excerpt was taken from the 2012 Consolidated Financial Statements of Cash Store Financial: Note 3 - Restatement of Previously Reported Results a) These consolidated financial statements for the years ended September 30, 2012 and 2011, as initially reported, have been amended and restated to correct for an error resulting from the misunderstanding of the settlement terms and conditions of the March 5, 2004 British Columbia Class Action claim, which resulted in the application of an accounting principle to measure and record the liability as at September 30, 2010 and subsequent reporting periods that was not appropriate in the circumstances. The restatement impacts the years ended September 30, 2012 and September 30, 2011 and the fifteen months ended September 30, 2010. The restatement resulted in a reduction in net income in the fifteen months ended September 30, 2010 of $6,601, an increase in the net income in the year ended September 30, 2011 of $1,537 and an increase in net loss of $433 in the year ended September 30, 2012.
Required
1. Why is it important that this type of information be disclosed?
2. Suppose you were the chief financial officer responsible for the financial statements. What ethical issues would you face as you consider what to report in 2012?
3. What are the negative consequences to Cash Store Financial of not telling the truth? What are the negative consequences to Cash Store Financial of telling the truth?