When the IASB and AcSB issue new accounting recommendations, the required implementation date (the date when a company has to start applying the recommendations) is usually 12 months or more after the date of publication. For example, in October 2010, the IASB issued new recommendations for classifying and reporting investments: companies are required to implement the new recommendations for fiscal years starting January 1, 2015. This allows companies some time to change their accounting procedures. Nevertheless, early implementation is usually encouraged for those who are able to do so, because new rules are intended to provide better representation of the company's financial performance and position.
Carol DesChenes, an accountant at Grocery Online, discusses with her vice-president of finance the need for early implementation of a recently issued recommendation. She says it will result in a much more faithful representation of the company's financial position. When the vice-president of finance determines that early implementation will have a negative impact on the profits reported for the year, he strongly discourages Carol from implementing the recommendation until it is required.
Instructions
(a) Who are the stakeholders in this situation?
(b) What, if any, are the ethical considerations in this situation?
(c) What could Carol gain by supporting early implementation? Who might be affected by the decision against early implementation?