Sbr physical class day 3

Question 20 marks – 36 minute

Cutherd case

Part a

A)Accountant is responsible to provide to relevant information with faithful representation to the

management and the shareholders and also the other shareholders.

Information technology maybe well much efficient when the accountant is preparing in financial
statement and information to the management

THE Challenges associated can be system issues

In the situation where there is centralized system the challenges associated can be that in case of
system breakdown the information will be slower and also in case if there is a division like in this
situation where the company doesn’ t any compatibility with the main system there will be
duplication of efforts reduction in the speed of the information processing .Also poor decision with
regard to pricing and other key element of costing resulting in the increase the admin cost and
eventually the miss management.

The challenge associated with a centralized can be data lose where in the case of the system
corruption or a situation where the password n cannot retained there will be challenge with regards to
data, therefore in that case this will be a major challenge where the financial reporting needs will be
an issue for the accountant.

Training associated with upskilling the staff who are not tech savy tin that case this can be a major
facto to be considered therefore for the business this will be a challenge that needs to be considered
with regards to the professional competence and due care.

Therer will be challenges associated with the system updates, where the company will eventually
have a issue with regards to new changes in the system and also sysem getting slower therefore in tha
case this will be a major challenge

Part b

Ethical issues of MR Ebrima Accountant

In the situation of the purchasing the new system mr bookman has undue influence, due to the
management contact seniority however the system is very poor an making financial information
report lag due to compatablity . the authorization is done by Mt Bookman and there is no specification
with relevance to have a separate system for this department which is still an ethical issue with
regards integritu and objextivitu there is lack of transparency and also there is intimidation from MR
Bookman and also a challenge by a internal auditor who is a friend of MR Bookman(familiriy
threat),Already the issue are reported to the internal auditor but there is no action taken.

The evidences needs to be collected by Mr Ebrima, of all the conversation on email with regards to the
application of system malfunction pricing issues caused and also the company needs to ensure they
have a application with regards to the business development issues and the relevance system to the
management , in the case the management does not consider the accountant can raise the issue to
the external auditor and eventually the issue will be reported to the shareholder

Ethical issues of MR franklin Internal Auditor

Mr franklin needs to understand his role is for company and not for his friend and avoid the conflict of
interest of familiarity threat , this is very much crucial since he needs to act with integrity and
objectivity where the company needs to ensure that they have a better internal transparent system to
raise issues, and internal auditor needs to take action to handle the system malfunction irrespective
of friendship

If he doesn’t act with transparency there are chances he may lose his position in the organization.

IAS 38 and IAS 36 Implication on the financial statmetn with regards to the new system

In accordance with IAS 38 Intagible assets, all intangible are initially measured as cost and all the
direct attributable cost to bring the asset to the working condition.

The company recorded the cost of 5 million of the new system and the payroll cost together as the
asset cost and charged at the profit or loss a/c

The company has to understand the general overheads like payroll cannot be accumulated with the
assets. And should be treated separately as an administration expense

The system investment needs to be capitalized to the statement of financial position below assets and
non current assets since the practice of upgrading system were at interval of 4 years

details dr cr
Intangible assest 5 Million
System license
Statement of profit or loss 5 million
(Admin cost)
correction

Subsequently the asset will be amortised at a useful life

5M/4 years= 1.25 Amortisation…

details DR CR
Statement of Profit or Loss 1.25
(Admin Expense)
Intangible assets 1.25

Suppose if there is an indication for obsolescene in that case the company can carryout imparirment
review in accordance IAS 36….

Jassie

The ethical for the fincance Director in the case of Oil and Gas Extraction

The finance director is highly reliance on information provided by chief data is authorizing without
having commercial acumen, therefore in that case the company may face ia risk in the case of wrong
approval which is mainly due lack of professional compentence due care. Also insisting the Chief data
Officer to manipulate the research finding to benefits form the clients is more like and advocacy
threats. Therefore in that case the company may have lots of finacial; implication in the long term.

In order to resolve the above issue the finance directors needs tos et boundaries with the chief data
officer and also in the meantime there can be an internal inspecgtion fot the research findings before
approvals, in that case such issues can be avoided.

Having Close Realtionshiop with Ms Stulos is eventually breaching objectivity and interfrity , dur to the
familiariy of the relationship where improper accounting suggestion provided like account for licence
using Lease IFRS 16 .Also the solution fort this can be ask for an updated opion from a recently
qyalifired accountant before suggesting, wtong suggestion will result in in lack of professional
competence to the finance director.

Providing information with confidentiality to the accountant Ms STylos can be considered lack of
confidentiality which may result insider trading and will be very much unethical to the shareholders,
also another factor to be considered can be that the company will result in losing credibility in the
market as we3ll, therefore the finance directors needs to make all communication with Ms stylos
format via email so transparency can be monitored

Question 34 important question

Question 22

Renshu

Exhibit 1

Ethical issues
(a)loan to customer ethical issues

(B) the finance director is facing the following issue

(c)self interest threat due to commission based pm ;pams granted during the period. Therefore he will
be internded to increase the number of loans in order to increase his commission but these loas are
given to play, the dilemma can be the Games are they Demerit Goods, considering the nature of
output it can be category of gaming. Since the management has created the package systn they too
may want the intentions to be [Link] the consumers are aware of the terms and
conditions,(1 month grace period), also the legal systems are strong wehre thereneeds to be
customers proof for such loan we can assume the country blockchain technology where the user will
be able to provide details automatically on KYC System

The portal may be exposed to cyber attacks, and there are evidences that such system have the risk fo
getting hacked, so does the company have any safeguards loke a firewall otp two factor authorization
and lso face recognition and also arte they continuously doing stress tasting where the system can be
disrupted therefore the competence is important and the due care is also importan regards ot
consumer protection

The defence with regard to the loan approved to the lower social background crowd is that it
improves the gamer financial position this is paradoxcical [Link] it is evident the user
cannot repaid the loan within the one month the accountant be an member acca without acting any
intergrity where he is allowing himself on undue influence and biasness toincrease his personal
earnings deposit bring aware of the system’

The appropriate action, the financial accountant can ensure the algorithm are very nuetrals and also
make sure that to provide the guidance gamer where interest rate are higher well in advance and
also prevent approving loan who cannot repaid. Also he can request to have a better commission
policy rather than having based on loan approvals

(b)

Intanbible assetgn treatnment of rias 38

In a accoundance with the ias 38 the asset can be considered ass intangible asset provided they are
able to be identified separately , there will be expected future economic benefit to the business and
cost can be measure releiiin the case of customer base it isecident tghat the database an be separable
and there is an exonomic beneft referral income therefore int that case this investmernt can be
considered as an acquisition of intangible asset

The domain as well will have the same effxct since it is seoarabke and also the domain will be able to
economic benefit since the domain is ofr other games as well,. In that case the domain too can be
considered as intangible asset

Ifrs 3- investment cost

The investment cost has include 50 % of the value, which does not go with the goodwill since these
intangible asset at not a part of acquisition for business combination since it not satify the definition
of busine4ss, so investment cost needs to be taken and it needs to be a part of acquisition of intangible
asset

31 december 20X8 did meet the recognition criteria for an intangible asset

Since the asset are approved by the government and the ias 38 criteiance are satisfying in that dcase
the following can be the reflection in the financial statements

Intial measurement can be the upfront payment and also the additional made to complete the game
to be at active usage therse cost can ve ccapitalized and presented in the financial statement ,
statement of financial position below assets non current asset as intangible asset]

Subsequently the methods on the how the life of the app is considered if the life of the app is finite ten
the app can be amortized over the estimated useful life. And also if there is nauy obselescen in that
case there can an impairement review. Further this will be considered as an expense in the statement
of profit or loss

In the meantime if the asset was disposed then the derecognition will be int the statement of financial
position or wehen the asset is completely impaired or completely amortized

Did not meet thhe recognition criteria for intangible asset

In the case where the asset is not recognized as per IAS 38 criterion all the cost associated with
asset will be considered as research cost and it will be matched and cancelled with the profit