獨立錄完結(jié)版基礎(chǔ)文字c2 ethics

1ThefundamentalProfessionalaccountantsshouldbeandhonest1ThefundamentalProfessionalaccountantsshouldbeandhonestinallprofessionalandbusinessrelationships.Integrityalsoimpliesfairdealingandtruthfulness.Professionalaccountantsshouldnotallowbias,conflictsofinterestortheundueinfluenceofotherstooverridetheirprofessionalorbusinessjudgement.duecareProfessionalaccountantsshouldmaintainprofessionalknowledgeandskillatthelevelrequiredtoensurethataclientreceivescompetentprofessionalservices,andtoactdiligentlyandinaccordancewithapplicabletechnicalandprofessionalstandards.ProfessionalaccountantsshouldrespecttheconfidentialityofinformationacquiredasaresultofprofessionalandbusinessProfessionalaccountantsshouldrespecttheconfidentialityofinformationacquiredasaresultofprofessionalandbusinessrelationshipsand,therefore,discloseanysuchinformationtothirdpartieswithoutproperauthority,Professionalaccountantsshouldensuretheycomplywithrelevantlawsandregulationsandshouldavoidanyactionthatdiscreditstheprofession.ApplicationinApplicationinexam-【2019/12Thedirectorappearstobeallowingbiasandundueinfluencefromthepressuresimposedbydebtcovenantgearingandoverdraftlimitsintothechoiceofaccountingtreatment,ratherthanfollowingaccounting【2019/06】Thereisevidencethatthedirectorsarewillingtomanipulatethefinancialstatementsinawaydirectlycontrarytotheethicalprinciplesofintegrityandobjectivity. Thedirectors’actionswithregardtotheaccountant.Itappearsthatthedirectorshaveputtheaccountantunderunduepressuretofalsifythefinancialstatementstomeettheirownneeds.【2020/03】Non-compliance【2020/03】Non-compliancewithaccountingstandardswouldbeabreachofarangeofethicalprinciplesincluding.AssumingthatMrsDawesisawareoftheerror,herintegritywouldalsobemanipulationiscontrarytothe【2018/12】licationinexam-breachofprofessionalofshowNewallasheldsaleintheconsolidatedfinancialstatementsandtocreatearestructuringprovisionlicationinexam-breachofprofessionalofshowNewallasheldsaleintheconsolidatedfinancialstatementsandtocreatearestructuringprovisiontoincludetheexpectedcostsofdisposalandfuturetradinglosses.Theaccountantappearstohavemadeacoupleofmistakeswhichwouldbeunexpectedfromaprofessionallyqualifedaccountant.Inparticular,theaccountantappearsunawareofwhichcostsshouldbeincludedwithinarestructuringprovisionandhasfailedtorecognisethatthereisnoobligatingeventinrelationtofutureoperatinglosses.Accountantsmustcarryouttheirworkwithduecareandattentionforthefnancialstatementstohavecredibility.Theymustthereforeensurethattheirknowledgeiskeptuptodateandthattheydocarryouttheirworkinaccordancewiththerelevantethicalandprofessionalstandards.Failuretodosowouldbeaccountantmustmakesurethattheyaddressthisissuethrough,forexample,attendingregulartrainingandprofessionaldevelopmentcourses.licationinexam-breachofMrShawcouldbeaccusedofinsidertradingwerehetoinformhiswifeoftheproposedrestructure.Insidertradinginvolvestheuseofnon-publicisedinformationinordertomakedecisionsonfinancialinvestmentsbasedontheinformationwhichothersdonotyetknowabout.ItisclearthatsuchbehaviourwouldnotbeethicalsinceMrsShawwouldbeinanadvantageouspositiontomakeinvestmentdecisionswhichcouldimpactunfairlyontheothershareholders.Insidertradershaveinformationwhichothersdolicationinexam-breachofMrShawcouldbeaccusedofinsidertradingwerehetoinformhiswifeoftheproposedrestructure.Insidertradinginvolvestheuseofnon-publicisedinformationinordertomakedecisionsonfinancialinvestmentsbasedontheinformationwhichothersdonotyetknowabout.ItisclearthatsuchbehaviourwouldnotbeethicalsinceMrsShawwouldbeinanadvantageouspositiontomakeinvestmentdecisionswhichcouldimpactunfairlyontheothershareholders.Insidertradershaveinformationwhichothersdonothavesuchthattheotherstakeholdersmayactdifferentlyandmakedifferentdecisionsshouldtheyhavebeenprivytothesameinformation.Suchactivitiesareseenasfraudulentandarelikelytobeinbreachoflocalmoneylaunderingregulations.MrShawhasbecomeprivytoconfidentialinformationregardingBagshotCo.OneofACCA’skeyethicalprinciplesisthatofconfidentiality.Informationmustnotbedisclosedtoothersunlessthereisalegalorprofessionalrightordutytodisclose.Professionalaccountantsmustalsoensurethattheydonotuseconfidentialinformationfortheirownpersonalbenefit.VEethicalVEethicalpFamiliaritythreatpSelf-reviewpAdvocacypIntimidationlicationinexam-Aself-interestthreatwillarise.Thedirectorshaveanlicationinexam-Aself-interestthreatwillarise.Thedirectorshaveanincentivetomanipulatethefinancialstatementsinordertotrytominimisethelossesandmaximiseprofits.Themanagingdirectorappearstobehappytomanipulatethefinancialstatements.Aself-interestthreatarisesfromtheissueoverthedebtcovenants.ItislikelythatthemanagingdirectorisconcernedabouthisjobsecurityshouldthebankrecallthedebtanddeemFiskertontonolongerbeagoingconcern.Thefinancedirectorfacesanadvocacythreatbypromotingaccountingtreatmentswhichcompromiseobjectivity.【2018/09】Thereareanumberofinstanceswhichsuggestthatthechiefoperatingoffcer?happytomanipulatethefnancialstatementsSheisnotwillingtoforanimpairmentlossforthesubsidencedespiteknowingthatthisiscontrarytoInternationalAccountingStandards.Thechiefoperatingoffcermustmakesurethatsheisnotundulyinfluencedbythislicationinexam-【2019/12】Theaccountantfacesanintimidationthreatgiventhecommentsfromthefinancedirectorwhopresumablyhasanlicationinexam-【2019/12】Theaccountantfacesanintimidationthreatgiventhecommentsfromthefinancedirectorwhopresumablyhasaninfluenceovercareerprospects.Assumingtheaccountantwishestokeepherjob,thisintimidationthreatisalsolinkedtooneof【2019/06】ThedirectorsactionswithregardtotheaccountantarecontrarytotheethicalprinciplesofprofessionalbehaviourItappearsthatthedirectorshaveputtheaccountantunderunduepressuretofalsifythefinancialstatementstomeettheirownneeds.Anintimidationthreatarisesfromthedirectors’implyingthattheaccountantwouldlosetheirjobshouldtheynotcomplywiththedirectors’instructions.???【2018/12】risesfromthebehaviourofthedirector.Itisimportantthatnooneindividualistoopowerfulanddomineeringinrunninganentity’saffairs.Anintimidationthreatarisesfromthemanagingdirectorpressurisingtheaccountanttooverstaterevenuefromthecontract.【2020/03】Case：Mrs【2020/03】Case：MrsDawes,CEO,?thatMrShaw,accountant,shouldincludearestructuringprovisionforalloftheinthefinancialstatementsMrsDawes’sinsistencethatarestructuringprovisionshouldbeincludedcouldconstituteanintimidationthreatalthoughhermotivationforincludingtheprovisionearlyisunclear.【2018/09】Thechiefoperatingoffcerisalsoactingunethicallybythreateningtodismisstheaccountantshouldtheytrytocorrectthefinancialstatements.Itisnotclearwhetherthechiefoperatingoffcerisaqualifedaccountantbuttheethicalprinciplesshouldextendtoallemployeesandnotjustqualifedaccountants.Threateningandintimidatingbehaviourisunacceptableandagainstallethicalprinciples.Theaccountantfacesanethicaldilemma.Theyhaveadutytoproducefnancialstatementswhichareobjectiveandfairbuttodosocouldmeanthattheylosetheirjob.?portanceofportanceofEthicsinaccountingisofutmostimportancetoprofessionalsandthosewhorelyontheirservices.Accountingprofessionalsknowthatpeoplewhousetheirservices,especiallydecisionmakersusingfinancialstatements,themtobehighlycompetent,reliable,andThosewhoworkinthefieldofaccountingmustnotonlybewellqualifiedbutmustalsopossessahighdegreeofprofessionalimportantassets.isoneofhisorherirectors'Directorsirectors'DirectorsforpreparationthestatementincompliancewithIFRSandstatutorylawsandIftheybelievethattheyarenotcomplyingwithIFRS,theyshouldtakeallstepstoensurethattheerrororirregularityisDirectorshavearesponsibilitytoacthonestlyandethicallyandnotbemotivatedbypersonalinterestandgain.Iftheethicalconductofthedirectorsisquestionablethenotherareasofthefinancialstatementsmayneedscrutiny.countants'【2019/12】Theaccountantshouldcomplywiththefundamentalethicalprinciplescountants'【2019/12】TheaccountantshouldcomplywiththefundamentalethicalprinciplessetoutintheACCAtoactwithintegrity,objectivity,professionalcompetenceandduecare,confidentialityandprofessionalbehaviour.Theaccountantshouldbemindfulofanythreatstothesefundamentalethicalprinciples.Indoingso,theaccountantshouldconsidertherelevantfacts,theethicalissuesinvolved,thefundamentalprincipleswhicharethreatened,whetherinternalproceduresexistwhichmitigatethethreats,andwhatalternativecoursesofactioncouldbetaken.untants'responsibility-untants'responsibility-完美套話【2019/12】Beforeacting,theaccountantshouldspeakwiththefinancedirector,trytoconfirmthefacts,anddiscussthetreatmentwiththefinancedirectorandexplaintherisksofnon-compliance:thesafeguardsofaccountingregulationsandthesanctionsimposedonthoseprofessionalaccountantswhodonotcomplymayresolvetheissue.Arecordofconversationsandactionsshouldbekept.StentComayalsohaveinternalprocedureswhichmitigatethethreats.Itmaybethatfinancedirector,inwhichcaseasafeguardwouldbetoIfthefinancedirectorrefusestocomplywithaccountingstandards,thenitwouldbeappropriatetodiscussthematterwithotherdirectorsoranauditcommittee(ifapplicable),toseekasolution,thenseekprofessionaladvicefromACCA,andconsiderlegaladviceifnecessary.Afinalconsiderationfortheaccountant,ifmatterscannotbesatisfactorilyresolved,would.應(yīng)用總?【2019/12】Discusstheethicalissuesarisingfrom,whichthe應(yīng)用總?【2019/12】Discusstheethicalissuesarisingfrom,whichtheaccountantshouldtaketoresolvethe?whicharisefromthe【2019/06】Identifyproposedaccountingtreatmentsandbehaviour.Youranswershouldalsoconsidertheimplicationsfortheaccountantarisingfromthebehaviour.【2018/12】Explainanyethicalissueswhichmayariseforthemanagingdirectorandtheaccountantfromeachofthescenarios.(7marks)【2018/09】Discusstheethicalissuesarisingfromthescenario,includinganyactionswhichFarhamandtheaccountantshouldundertake.(7marks)【2020/03例外】IdentifyanddiscusstheethicalissuesarisingfromthescenariowhichMrShawneedstoconsiderandwhatactionsheshouldtakeasaconsequence.(5marks)???Ex小變型Pilotpaper2AnewaccountanthasrecentlystartedworkatGustoso.ShenoticedthattheprovisionsbalanceasEx小變型Pilotpaper2AnewaccountanthasrecentlystartedworkatGustoso.Shenoticedthattheprovisionsbalanceasat31December20X7issignificantlyhigherthanintheprioryear.Shemadeenquiriesofthefinancedirector,whoexplainedthattheincreasewasduetosubstantialchangesinfoodsafetyandhygienelawswhichbecomeeffectiveduring20X8.Asaresult,Gustosomustretrainalargeproportionofitsworkforce.Thisretraininghasyettooccur,soaprovisionhasbeenrecognisedfortheestimatedcostof$2million.Thefinancedirectorthentoldtheaccountantthatsuchenquirieswereawasteoftimeandwouldnotbelookedatfavourablywhendecidingonherfuturepayrisesandbonuses.Thethefinancedirectorandhasethicalresponsibilitytodoso.Despitethefactthatthefinancedirectorisactinginanintimidatingmanner,theaccountantshouldexplainthetechnicalissuestothedirector.Ifthedirectorrefusestocomplywithaccountingstandards,thenitwouldbeappropriatetodiscussthematterwithotherThethefinancedirectorandhasethicalresponsibilitytodoso.Despitethefactthatthefinancedirectorisactinginanintimidatingmanner,theaccountantshouldexplainthetechnicalissuestothedirector.Ifthedirectorrefusestocomplywithaccountingstandards,thenitwouldbeappropriatetodiscussthematterwithotherdirectorsandtoseekprofessionaladvicefromACCA.Legaladviceshouldbeconsideredifnecessary.Theaccountantshouldkeeparecordofconversationsandactions.Resignationshouldbeconsideredifthematterscannotbesatisfactorilyresolved.easoneasonoimofUnethicalManagementoftenseeksloopholesinfinancialreportingstandardsthatallowthemtoadjustthefinancialstatementsasfarasispracticabletoachievetheirdesiredReasonsforsuchbehaviouroftenincludemarketexpectations,personalrealisationofabonus,andmaintenanceofpositionwithinamarketsector.【2018/09【2018/09】TheCOOhasarguedthat【2018/09【2018/09】TheCOOhasarguedthattheyhaveadutytosecureahighsalespricetomaximisethereturnforshareholdersofFarham.【Answer】Itistruethatthedirectorsdohavearesponsibilitytorunthegrouponbehalfoftheirshareholdersandtotrytomaximisetheirreturn.Thismustnotbetothedetriment,though,ofproducingfnancialstatementswhichareobjectiveandfaithfullyrepresenttheperformanceofthe【2019/06【2019/06】ThedirectorsandaccountantareawarethattheproposedtreatmentdoesnotconformtoIFRSStandards.Thedirectorsbelievethat【2019/06【2019/06】ThedirectorsandaccountantareawarethattheproposedtreatmentdoesnotconformtoIFRSStandards.ThedirectorsbelievethattheproposedtreatmentisjustifiedasitwillhelpHudsonmaintainitsdebtcovenantobligationsandwillthereforebeinthebestinterestsoftheirshareholderswhoaretheprimarystakeholder.【Answer】Thedirectorsexplanationfortheirproposedtreatmentsarenotjustified.Directorsareappointedtorunthebusinessonbehalfofthecompany’sshareholderswhoaretheprimarystakeholder.Itwillbeintheshareholdersinterestsforthecompanytobeprofitableandtomaintainnetassetswithinthedebtcovenantstipulations.However,thisshouldnotbeattheexpenseoftheDeliberatemanipulationoffinancialstatementswillreducestakeholders’confidenceinthereliabilityofthefinancialstatementsandtheaccountancyprofessionasawhole.ThedirectorsareIFRSEx【2020/03DiscusswhatEx【2020/03Discusswhatismeantbygoodstewardshipofacompanyandwhethertherestructureandtherecognitionofarestructuringprovisioninthefinancialstatementsareexamplesofgoodstewardship.(4marks)AnswerStewardshipisanethicalprinciplewhichembodiestheresponsibleplanningandmanagementofresources.ThedirectorsofBagshotCoperformastewardshiproleinthattheyareappointedAnswerStewardshipisanethicalprinciplewhichembodiestheresponsibleplanningandmanagementofresources.ThedirectorsofBagshotCoperformastewardshiproleinthattheyareappointedbytheshareholderstomanageBagshotCoontheirbehalf.ThedirectorsthereforeassumeresponsibilitiestoprotectthefromeffectsofeconomicfactorssuchaspriceandtechnologicalchangesandtoensurethatBagshotCocomplieswithalllaws,regulationsandcontractualobligations.Groupresultshavebeendisappointinginrecentyearsalthoughnospecificcauseshavebeenidentified.Itcouldbeargued,therefore,thatisactingingoodfaithandreflectinggoodprinciplesstewardship.Itisanticipatedthatlong-termshareholdervaluewillenhancedfromtheAnswerAnswerAsecondfactorofgoodstewardshipisthatitisimportantthatinvestors,bothexistingandpotential,andlendershaveabouttheentity'sresourcessothattheycanassesshowefficientlyandeffectivelytheentity'smanagementandgoverningboardhavedischargedtheirresponsibilities.Itisimportantthereforethatthefinancialstatementsaretransparent,objectiveandcomplyfullywithInternationalFinancialReportingStandards.MrsDaweswantsBagshotCotoincludearestructuringprovisionasat31December20X5eventhoughnoobligationarises.Whilstprudenceisaguidingprinciplewhendealingwithissuesofuncertainty,excessiveprudencecannotbejustified.AsaqualifiedmemberofACCA,itshouldbeapparenttoMrsDawesthatnoprovisionshouldberecognisedandtoincludeonewouldbe自己自己一定要獨立完成再聽點StentCoisaconsumerelectronicscompanywhichhasfacedachallengingyearduetoincreasedcompetition.StentCohasayearendStentCoisaconsumerelectronicscompanywhichhasfacedachallengingyearduetoincreasedcompetition.StentCohasayearendof30September20X9andtheunauditeddraftfinancialstatementsreportanoperatingloss.Inadditiontothis,debtcovenantlimitsbasedareclosetobeingbreachedthecompanyisapproachingitsoverdraftCashadvancefromBudsterOn27September20X9,StentaCashadvancefromBudsterOn27September20X9,Stentacashadvanceof$3mreceivedfromcustomer,BudsterCo,as.CoissolelyownedbyStentCo’sfinancedirector.TheaccountantseensignedbybothcompaniesstatingthatthewillberepaidtoBudsterCoinfourmonths’time.ThedirectorarguesthattheproposedaccountingtreatmentisacceptablebecausethepaymenthasbeenmadeinadvanceincaseBudsterCowishestoordergoodsinthenextfourmonths.However,theaccountanthasseennoevidenceofanyintentfromBudsterCotoplaceorderswithStent(4On1October20X8,theCEOandfinancedirectoreachpaid$2mcashinexchangeforpreferencesharesfromStentCowhichprovidecumulativedividendsofOn1October20X8,theCEOandfinancedirectoreachpaid$2mcashinexchangeforpreferencesharesfromStentCowhichprovidecumulativedividendsof7%perannum.Thesepreferencesharescaneitherbeconvertedintoafixednumberofordinarysharesintwoyears’time,orredeemedatparonthesamedate,atthechoiceoftheaccountantthatthepreferencesharesshouldtobecausetheconversionisintoafixednumberofordinarysharesonafixeddate(‘fixedforfixed’)andconversioniscertain(giventhecurrentmarketvalueoftheordinaryshares).(4DeferredtaxStentCoincludesadeferredtaxassetinitsstatementoffinancialposition,basedonDeferredtaxStentCoincludesadeferredtaxassetinitsstatementoffinancialposition,basedonlossesincurredinthecurrentandtheprevioustwodeferredtaxtoinclude.HehassuggestedthisonthebasisthatCowillreturntoprofitabilityonceitsfundingissuesare(3DiscussappropriateDiscussappropriateaccountingtreatmentswhichStentCoshouldadoptforallissuesidentifiedaboveNote:ThemarkallocationisshownagainsteachissueTheaccountanthasbeeninherpositionforonlyafewmonthsandthefinancedirectorhasrecentlycommentedthat‘a(chǎn)lltheseTheaccountanthasbeeninherpositionforonlyafewmonthsandthefinancedirectorhasrecentlycommentedthat‘a(chǎn)lltheseaccountingtreatmentsmustbemadeexactlyasIhavesuggestedtoensurethegrowthofthebusinessandthesecurityofallourjobs’.BothfinancedirectorandaccountantareACCAqualifiedDiscusstheethicalissuesarisingfrom,includinganywhichtheaccountantshouldtake(7Professionalmarkswillbeawardedinquestion2fortheapplication.(2(20er-CashadvancefromBudsterStentCo’sfinancedirectoralsocontrolsBudsterCo,thecompanywhichhaspaidacashadvancetoStentCo.IAS24RelatedPartyDisclosuresrequiresanentity’sfinancialstatementstocontaindisclosuresnecessarytodrawattentiontothepossibilitythatitsfinancialstatementsmayhavebeenaffectedbytheexistenceofrelatedpartiesandbytransactionsandoutstandingbalanceswithsuchparties.Includedinthedefinitionofarelatedpartyisapersonidentifiedasholdingsignificantinfluenceovertheentity,er-CashadvancefromBudsterStentCo’sfinancedirectoralsocontrolsBudsterCo,thecompanywhichhaspaidacashadvancetoStentCo.IAS24RelatedPartyDisclosuresrequiresanentity’sfinancialstatementstocontaindisclosuresnecessarytodrawattentiontothepossibilitythatitsfinancialstatementsmayhavebeenaffectedbytheexistenceofrelatedpartiesandbytransactionsandoutstandingbalanceswithsuchparties.Includedinthedefinitionofarelatedpartyisapersonidentifiedasholdingsignificantinfluenceovertheentity,orwhoisamemberofthekeymanagementpersonneloftheentity.Thefinancedirector,akeymanagementpersonnelofStentCo,isarelatedparty.Inthiscase,StentComustdisclosethenatureoftherelatedpartyrelationshipaswellasinformationaboutalltransactionsandoutstandingbalancesbetweenStentCoandBudsterCo(ownedandcontrolledbythefinancedirector),necessaryforuserstounderstandthepotentialeffectoftherelationshiponthefinancialstatements.TheadvancefromBudsterTheadvancefromBudsterComeetstheConceptualFrameworkdefinitionof:Stenthasapresentobligation(legallyenforceableasaconsequenceofabindingcontract),thesettlementofwhichinvolvesStentCogivingupresourcesembodyingeconomicbenefitsinordertosatisfytheIAS1PresentationofFinancialStatementsstatesthatanentityshallnotoffsetassetsandliabilities,unlessrequiredorpermittedbyanInternationalFinancialReportingStandard(IFRS?).Thefinancedirectorwantstoincludethereceiptasacreditbalanceintradereceivables,nettinganyamountsowedbyBudsterCofromtrading,wouldresultinamisclassificationofacurrentliabilityundercurrentOffsettingafinancialassetandafinancialliabilityispermittedaccordingtoIAS32FinancialInstruments:Presentationwhen,andonlywhen,anentityhasalegallyenforceablerighttosetofftherecognisedamountsandintendseithertosettleonanetbasis,ortorealisetheassetandsettletheliabilitysimultaneously.Nosuchagreementisevidentinthiscase,soStentCoshouldreportseparatelybothassetsandExceptwhenitreflectsthesubstanceofthetransactionorotherevent,offsettingdetractsfromtheabilityofusersbothtounderstandthetransactions,othereventsandconditionswhichhaveoccurredandtoassesstheentity’sfuturecashflows.StentCowouldbeshowingaExceptwhenitreflectsthesubstanceofthetransactionorotherevent,offsettingdetractsfromtheabilityofusersbothtounderstandthetransactions,othereventsandconditionswhichhaveoccurredandtoassesstheentity’sfuturecashflows.StentCowouldbeshowingalowercurrentassetfigureandconcealingtheliability,whichifdisclosedasacurrentliabilitycouldbeincludedinthedebtelementofthegearingcalculation.IAS32definesanequityinstrumentasanyIAS32definesanequityinstrumentasanycontractwhichevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.Anequityinstrumenthasnocontractualobligationtodelivercashoranotherfinancialasset,ortoexchangefinancialassetsorfinancialliabilitiesunderpotentiallyunfavourableconditions.Ifsettledbytheissuer’sownequityinstruments,aninstrumentcontractualobligationtodeliveranumber,orissettledonlybyexchangingamountoforanotherfinancialassetforafixednumberofitsownequityPreferenceshareswhicharerequiredtobeconvertedintoafixednumberofordinarysharesonafixeddateshouldbeclassifiedasequity(thisisPreferenceshareswhicharerequiredtobeconvertedintoafixednumberofordinarysharesonafixeddateshouldbeclassifiedasequity(thisisrequirementtowhichthefinanceHowever,acriticalfeatureindifferentiatingafinancialliabilityfromequityinstrumentistheexistenceofofissuereithertodelivercashoranotherfinancialassettotheholder,ortoexchangefinancialassetsorfinancialliabilitieswiththeholder,underconditionswhicharepotentiallyunfavourabletotheissuer.Inthiscase,StentCohasissuedconvertibleredeemablepreference–whichmakeslittlecommercialsensefromthecompany’sperspective,astheyoffertheholderthebenefitofconversionintoordinarysharesifsharepricesrise,andthesecurityofredemption(atthechoiceoftheholder)ifsharepricesfall.IAS32IAS32notesthatofafinancialinstrument,thanitslegalform,governsitsclassificationintheentity’sstatementoffinancialposition.ApreferencesharewhichprovidesformandatoryredemptionforafixedordeterminableamountatafixedordeterminablefuturedateorgivestheholdertherighttorequiretheissuertoredeemtheinstrumentataparticulardateforafixedordeterminableamountisaBecausethepreferencesharesoffertheholderthechoiceofconversionBecausethepreferencesharesoffertheholderthechoiceofconversionintoordinarysharesaswellasredemptionintwoyears’time,thetermsofthefinancialinstrumentshouldbeevaluatedtodeterminewhetheritcontainsbothaliabilityandanequitySuchcomponentsareclassifiedseparatelyascompoundthecomponentsofainstrumentwhichcreatesbothafinancialliabilityoftheentity(acontractualarrangementtodelivercashoranotherfinancialasset)andanequityinstrument(acalloptiongrantingtheholdertheright,foraspecifiedperiodoftime,toconvertitintoafixednumberofordinarysharesoftheentity).InaccordancewithIFRS9FinancialInstruments,whentheinitialcarryingamountofacompoundInaccordancewithIFRS9FinancialInstruments,whentheinitialcarryingamountofacompoundfinancialinstrumentisallocatedtoitsequityandliabilitycomponents,theequitycomponentisassignedtheresidualamountafterdeductingfromthefairvalueoftheinstrumentasawholetheamountseparatelydeterminedfortheliabilitycomponent.StentCowouldmeasurethefairvalueoftheconsiderationinrespectoftheliabilitycomponentbasedonthefairvalueofasimilarliabilitywithoutanyassociatedequityconversionoption.Theequitycomponentisassignedtheresidualamount.woulddecreaseifthedraftfinancialstatementshadincludedthepreferenceshareswithinequity:(thepresentvalueoftheDeferredtaxInaccordancewithIAS12IncomeTaxes,adeferredtaxassetshallberecognisedforthecarry-forwardofunusedtaxDeferredtaxInaccordancewithIAS12IncomeTaxes,adeferredtaxassetshallberecognisedforthecarry-forwardofunusedtaxlossestotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichtheunusedtaxlossescanbeutilised.However,theexistenceofunusedtaxlossesisstrongevidencethatfuturetaxableprofitmaynotbeavailable.Therefore,whenanentityhasahistoryofrecentlosses,theentityrecognisesadeferredtaxassetarisingfromunusedtaxlossesonlytotheextentthatithasconvincingevidencethatsufficienttaxableprofitwillbeavailableagainstwhichtheunusedtaxlossescanbeutilised.Insuchcircumstances,theamountofthedeferredtaxassetandthenatureoftheevidencesupportingitsrecognitionmustbedisclosed.ThedirectorsofStentCoshouldconsiderwhetheritisprobablethatStentCowillhaveprofitsbeforetheunusedtaxlossesorunusedtax,whethertheunusedtaxlossesfromidentifiablecauseswhichareunlikelytorecur;andwhethertaxplanningopportunitiesareavailabletotheentitywhichwillcreatetaxableprofitintheperiodinwhichtheunusedtaxlossesorunusedtaxcreditscanbeutilised.Totheextentthatitisnotprobablethattaxableprofitwillbeavailableagainstwhichtheunusedtaxlossesorunusedtaxcreditscanbeutilised,thedeferredtaxassetshouldnotberecognised.Theremovalofadeferredtaxassetwouldreducenetassets,ander-EthicalTheaccountantshoulder-EthicalTheaccountantshouldcomplywiththefundamentalethicalprinciplessetoutintheACCARulebook:toactwithintegrity,objectivity,professionalcompetenceandduecare,confidentialityandprofessionalbehaviour.Theaccountantshouldbemindfulofany