04-07-2010, 03:45 AM
If please somebody can help me to the below question i know the five fundamental code of ethics i am able to understand why......
Question is )Explain the five fundamental principles of the IFAC Code of Ethics for Professional Accountants with which Anne needs to comply. Based on the information given in the case study, state which principle Anne would find hardest to comply with.(why)
Case study
Every Ltd sells exclusive kitchen appliances in a fashionable area of a large UK city. The business has been incorporated for three years. The sole director of the business, Tom Every, also owns 75% of the shares of the company while his father, Trevor Every, owns the balance of the share capital. Tom keeps his own financial records using spreadsheets and gives a draft trial balance to his professionally qualified accountant, Anne Rogers, who finalises the accounts and ensures that all the legal and regulatory responsibilities of the company are met.
Anne currently runs a successful but very busy accounting practice. She finds it very difficult to keep herself up-to-date with the latest accounting standards. Anne is a member of a professional accounting body that has signed up to the IFAC Code of Ethics for Professional Accountants.
Below is Every Ltd's Trial Balance as at 31 December 20X4
Dr Cr
£ £
Advertising 9,250
Bank 80,250
Long term loan at 5% 55,000
Opening stock at 1 January 20X4 43,500
Retained profit at 1 January 20X4 73,685
Creditors 135,080
Debtors 222,870
Provision for doubtful debts 3,400
Directors remuneration 91,605
VAT liability 14,205
Carriage out 4,352
Cost of office equipment at 1 January 20X4 122,500
Depreciation on office equipment at 1 January 20X4 58,501
Cost of showroom equipment at 1 January 20X4 113,450
Depreciation on showroom equipment at 1 January 20X4 32,250
Office expenses 17,462
Office salaries 36,680
Purchases 180,125
Sales 489,568
Salesforce wages 42,750
Sales expenses 3,562
Rent and rates 19,600
Heat and light 5,733
Issued share capital (at £1 per share) 132,000
993,689 993,689
During the last week of the financial year Tom has finalised the following further information
Further information
⢠The closing stock at 31 December 20X4 was £35,250.
⢠Bad debts of £1,670 needed to be written off at the year end.
⢠The provision for doubtful debts at the year end was to be kept at 2% of debtors, net of bad debts.
⢠Depreciation of office equipment for the year ended 31/12/20X4 was £2,750.
⢠Depreciation of showroom equipment for year ended 31/12/20X4 was £1,265.
⢠Rent paid in advance as at 31/12/20X4 was £800.
⢠Sales expenses owing as at 31/12/20X4 were £646.
⢠Office expenses owing as at 31/12/20X4 were £850.
⢠Corporation tax on the profit for the year unpaid as at 31/12/20X4 was £3,750.
⢠Interest on the long term loan had not been accounted for as at 31/12/20X4.
⢠A final dividend of 1p per share was approved by the shareholders but unpaid as at 31/12/20X4.
Question is )Explain the five fundamental principles of the IFAC Code of Ethics for Professional Accountants with which Anne needs to comply. Based on the information given in the case study, state which principle Anne would find hardest to comply with.(why)
Case study
Every Ltd sells exclusive kitchen appliances in a fashionable area of a large UK city. The business has been incorporated for three years. The sole director of the business, Tom Every, also owns 75% of the shares of the company while his father, Trevor Every, owns the balance of the share capital. Tom keeps his own financial records using spreadsheets and gives a draft trial balance to his professionally qualified accountant, Anne Rogers, who finalises the accounts and ensures that all the legal and regulatory responsibilities of the company are met.
Anne currently runs a successful but very busy accounting practice. She finds it very difficult to keep herself up-to-date with the latest accounting standards. Anne is a member of a professional accounting body that has signed up to the IFAC Code of Ethics for Professional Accountants.
Below is Every Ltd's Trial Balance as at 31 December 20X4
Dr Cr
£ £
Advertising 9,250
Bank 80,250
Long term loan at 5% 55,000
Opening stock at 1 January 20X4 43,500
Retained profit at 1 January 20X4 73,685
Creditors 135,080
Debtors 222,870
Provision for doubtful debts 3,400
Directors remuneration 91,605
VAT liability 14,205
Carriage out 4,352
Cost of office equipment at 1 January 20X4 122,500
Depreciation on office equipment at 1 January 20X4 58,501
Cost of showroom equipment at 1 January 20X4 113,450
Depreciation on showroom equipment at 1 January 20X4 32,250
Office expenses 17,462
Office salaries 36,680
Purchases 180,125
Sales 489,568
Salesforce wages 42,750
Sales expenses 3,562
Rent and rates 19,600
Heat and light 5,733
Issued share capital (at £1 per share) 132,000
993,689 993,689
During the last week of the financial year Tom has finalised the following further information
Further information
⢠The closing stock at 31 December 20X4 was £35,250.
⢠Bad debts of £1,670 needed to be written off at the year end.
⢠The provision for doubtful debts at the year end was to be kept at 2% of debtors, net of bad debts.
⢠Depreciation of office equipment for the year ended 31/12/20X4 was £2,750.
⢠Depreciation of showroom equipment for year ended 31/12/20X4 was £1,265.
⢠Rent paid in advance as at 31/12/20X4 was £800.
⢠Sales expenses owing as at 31/12/20X4 were £646.
⢠Office expenses owing as at 31/12/20X4 were £850.
⢠Corporation tax on the profit for the year unpaid as at 31/12/20X4 was £3,750.
⢠Interest on the long term loan had not been accounted for as at 31/12/20X4.
⢠A final dividend of 1p per share was approved by the shareholders but unpaid as at 31/12/20X4.
