Discussion Questions
Questions 1:
The CEO and other top executives are the key individuals who direct the operations and the decision making of the public limited company. The public limited companies have to follow more business laws as compared to other forms of business because of the involvement of the common public. Therefore, the health or other personal problems which are affecting the performance of the director is relevant news for the investors of the public limited company. The main reason is that if the company lose any key personal, then it is highly probable that the business will lose business or the possible future projects. Therefore, the personal issues must be disclosed according to the interest of the shareholders.
Question 2:
It is true that the bribery is a part of business in many countries and the accountants recorded these unethical actions under the category of a business expense in the financial statements. However, such transactions are prohibited under the code of ethics and other laws. The business must be performed according to the ethical and corporate governance codes. Moreover, the business and the directors must reject the benefits in kind and the luxury gifts politely, to keep business ethical.
Question 3:
The ‘overworked’ accounting staff will increase the risk of misstatements and wrong entries in the accounts of the business. In the accounting of complex accounts, it is highly probable that the concepts of ‘matching rule’ and the ‘economic reality’ are treated wrongly. Therefore, the complex accounts must be recalculated and any error must be rectified. The sample size of the transactions on the complex accounts must be increased to make sure that the transactions are representing the majority of the complex accounts. Before accepting the new client, the accountancy firm can contact the leaving accounting firm to identify the control risks. Moreover, the analytical procedures, such as ratio analysis, can identify the areas which have weak internal controls.
