Application of Fundamental Principles of IFAC Code for Decision Making Assessment Answer
Answer to question no-1
As per the fundamental principle of IFAC code of ethics , When an auditor come to conduct the audit then they are expected to follow all the ethical requirement as formed by the authority and also has to implement all the auditing standard as prescribed to maintained the independence of auditors.
In the given case shipping supervisor is trying to provide the gift to the auditor of inventory, this can influence the impact of audit procedure and shipping manager may also want from the auditor to do not disclose the non-compliance on his part to the top management of the company so that he will not be in any fear of job (Di, & Zhiming, 2007).
Hence Dan Folly should not accept the gift of $ 200 from the shipping manger as it will impact the independence of the audit procedure.
While conducting the audit, auditor is expected to have all the qualification and technical knowledge concerning to the audit so that an audit can be conducted as per the standard on auditing. If the any misstatement has found during the audit which is related to the past year then it has to be consider in current year audit report and financial adjustment has to be done by the top management of the company under the supervision of auditor (Tianxi, 2016).
In the given case Lin has stolen the cash from the company $ 200000 which has been discovered in current year now, Marry and his senior auditor has to bring the attention to top management and pass the journal entries for accounting adjustment in current year. Also this will be disclose in auditors report.
Answer to question no- 2
Budgeted performance of Sam distributors
Actual performance of Sam distributors
Sam distributors booked there operating results at forecasted exchange rate of AU$0.30. and the exchange rate at year end is AU$0.25 and budgeted rate is AU$0.32, that is 28% higher than the actual exchange rate. Apart from this Starting exchange rate is AU$0.35 and forecast rate of Sam distributors is AU $0.30. With keeping in mind all such circumstances we can conclude that performance of Tongon manager is satisfactory.
Answer to question no-3
|Calculation of adjusted net profit according to IFRS|
|1||Net profit according to Malaysian GAAP||12,00,000.00|
|2||Add: Opening stock as per LIFO||9,50,000.00|
|3||Less: Opening stock as per FIFO||-6,80,000.00|
|4||Less: Closing stock as per LIFO||-7,50,000.00|
|5||Add: Closing stock as per FIFO||5,50,000.00|
|6||Less: Overcapitalization of research & Development Expense||-2,00,000.00|
|7||Add: Amortization of goodwill not allowed in IFRS||60,000.00|
|Adjusted Net profit||11,30,000.00|
|Calculation of adjusted operating cash flows according to IFRS|
|1||Net cash flows from operating activities according to Malaysian GAAP||19,00,000.00|
|2||Less: Interest received included in operating cash flow||-6,00,000.00|
|Adjusted Operating cash flows||13,00,000.00|
Net cash from operating activities to net profit ratio = Adjusted operating cash flows according to IFRS / Adjusted Net profit according to IFRS
= 1300000/1130000 = 1.15
The generally acceptable ratio of the private venture capital firm is 1.5, but this ratio of Belly limited is 1.15. So belly limited is not able to obtain the financing from the Australian venture capital firm.
Answer to question no-4
Yes it is true that Keiretsu groupings do exist I the japan and code-oriented system implemented through a strong central government to maintain the business economy of the country. Keiretsu groupings refer to the group of company in which shareholder are having the cross holding through the investment. In Japan they do have the Keiretsu groupings in their business culture so that it provide the shelter to the business economy and following are the example of the it (Tianxi,. 2016).
Example: - Bank of Tokyo –Mitsubishi is the top example of it. Mitsubishi have many other business under one roof as they have Mitsubishi trust and banking and Mitsubishi motors.
It is true that international financial reporting standard has establish the requirement of consolidation of financial statement of company for the purpose of global compliance and also attracting the global investors for the multinational company.
But national accosting system has also been implemented by some countries because they want their domestic company to show the single standalone financial statement which show the domestic financial position of the company. And all the subsidiary company should also show their standalone financial statement to show the financial position by their own business.
Answer to question no-5
Management control system help the organization to find and resolve the problem before they provide any harm to the organization. It help to reduce the expenses and loss of the company by providing the holistic approach to achieve the goal and object of company (Gibson, & Frishkoff, 2019).
|Achieving organization object||This help in measuring the goal achievement of the company and if there is any problem that has been arising then it can be removed with in time limit. This will help the big organization to point towards the goal achievement.|
|Standards measurement||Management control system should be developed in such a way that it will compare the predetermined standard with actual performance of the each department so that desirable outcome can be achieve and variance can be removed.|
|Making efficient use of resource||Management control system can help to analysis the requirement of the resource for the business in future time so that procurement can be done and managing the efficient use of resource.|
|Coordination between business activity||Each department activity can be coordinate through the management system so that conflict between them does not arise and time and cost can be save for the company (Hoque, 2012).|