Professional and Ethical Behaviour}

Nicky is the owner of Nicky Automotive Limited (NAL). NAL is a family business that has served southern Ontario for the last 40 years. With large chain stores now offering automotive services to consumers, the competition has been fierce and NAL has seen a significant decrease in sales over the last two years. NAL finds itself struggling to pay off current obligations and needs to obtain financing from the local bank to help the business through the summer months when customers normally don't need as many automotive repairs and hence cash flow is tight.

NAL has never needed a loan from the bank, and Nicky doesn't know where to begin. He contacts the bank to see what is required to obtain financing. The bank asks Nicky to bring in NAL's current-year draft financial statements. The bank says it wants to make sure the statement of financial position looks strong and will use the statements to assess the ability of NAL to pay back the loan. Showing strong ratios will help NAL's cause in getting the loan. Nicky says he'll get them together and be in on Friday.

Laura is a professional chartered accountant who takes care of all of NAL's accounting and preparation of financial statements. Nicky tells her about the call with the bank and requests that she have the financial statements ready by Friday. Nicky also tells Laura that the company's future depends on getting this loan. "We're either going to stay afloat or have to file for creditor protection." Nicky goes on to tell Laura, "Make sure that the statement they want looks good, especially those ratios they always look at. Even if you have to reclassify items to make the ratios look better, just do it and we'll deal with it later!"

Laura is a bit shocked at Nicky's comments but proceeds to put together the draft financial statements.

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Comment on any professional behaviour issues.