A Case Study of Brother Kofi and Olamide Limited You are the Group Chief Accountant of Kofi Limited and Olamide Limited. Kofi Limited is a holding company while Olamide Limited is a subsidiary company registered in Nigeria. Kofi Limited is a medium-sized retailer of imported and retailer of hand sanitizers in Ghana. Due to numerous requests from the customers in Nigeria for the company's product, Kofi Limited decided to expand its operations to Nigeria to increase sales and make more profits for the shareholders. In 2016 the business registered a new company in Nigeria and named it Olamide Limited. The sole purpose of incorporating Olamide Limited in Nigeria was to boost the company's market share and make more profits for the shareholders. But the financial performance of Olamide Limited has not been encouraging to the management of the business, and shareholders have complained about the decision to expand into the Nigerian Market. Shareholders have noted with dismay that Olamide Limited has reported continuous losses for the business for the past two years. The financial statements show that the Nigeria expansion strategy was extremely bad and management is blamed for the bad decision to expand into the Nigerian market. Management explained the past performance at the Annual General Meeting and provide forecast to the future performance of the business. At the meeting, the management assured the shareholders that measures taken in 2019 is going to put an end to the loss making of Olamide Limited. The Managing Director explained that the losses recorded were temporal and that the future financial performance will be better. Contrary to the promise made to the shareholders, 2019 financial performance was also not encouraging, because Olamide Limited has recorded a net loss of GH GH 100,000 for the year ended 31st December, 2019. The Managing Director argued that unless something drastic is done to the figures in the 2019 financial reports for the period under review, the going concern assumption for Olamide Limited has to be revoked. This net loss recorded for 2019 was due to high expenditure on advertisement incurred for that period, while sales fell below the expected target. The Managing Director is concerned about Olamide Limited continuous reporting of losses to the group and called for an emergency meeting to be held to decide on the figures to be included in the 2019 financial statements. At the Board meeting to discuss the figure to be included in the financial statements, the following key managers made some statements for the consideration of the Managing Director. Notable among them were reprinted for the consideration of the board. The Group General Manager argued and was quoted here that: "Figures to be included in the financial statement are always grey and that there are very little absolute figures in the financial statement. A smart manager is able to save the reputation of the business in times of financial difficulties by simply changing accounting policies to boost performance of the business. Just a change of the company's depreciation policy from straight line method to reducing balance method is enough to change the company's net loss to net profit for the business". The Group Operational Manager sided with the comment made to change net loss to net profit using the company's policy and defended his position that "Managers are engaged to maximize profits for the shareholders, 9 A Case Study of Brother Kofi and Olamide Limited You are the Group Chief Accountant of Kofi Limited and Olamide Limited. Kofi Limited is a holding company while Olamide Limited is a subsidiary company registered in Nigeria. Kofi Limited is a medium-sized retailer of imported and retailer of hand sanitizers in Ghana. Due to numerous requests from the customers in Nigeria for the company's product, Kofi Limited decided to expand its operations to Nigeria to increase sales and make more profits for the shareholders. In 2016 the business registered a new company in Nigeria and named it Olamide Limited. The sole purpose of incorporating Olamide Limited in Nigeria was to boost the company's market share and make more profits for the shareholders. But the financial performance of Olamide Limited has not been encouraging to the management of the business, and shareholders have complained about the decision to expand into the Nigerian Market. Shareholders have noted with dismay that Olamide Limited has reported continuous losses for the business for the past two years. The financial statements show that the Nigeria expansion strategy was extremely bad and management is blamed for the bad decision to expand into the Nigerian market. Management explained the past performance at the Annual General Meeting and provide forecast to the future performance of the business. At the meeting, the management assured the shareholders that measures taken in 2019 is going to put an end to the loss making of Olamide Limited. The Managing Director explained that the losses recorded were temporal and that the future financial performance will be better. Contrary to the promise made to the shareholders, 2019 financial performance was also not encouraging, because Olamide Limited has recorded a net loss of GH GH 100,000 for the year ended 31st December, 2019. The Managing Director argued that unless something drastic is done to the figures in the 2019 financial reports for the period under review, the going concern assumption for Olamide Limited has to be revoked. This net loss recorded for 2019 was due to high expenditure on advertisement incurred for that period, while sales fell below the expected target. The Managing Director is concerned about Olamide Limited continuous reporting of losses to the group and called for an emergency meeting to be held to decide on the figures to be included in the 2019 financial statements. At the Board meeting to discuss the figure to be included in the financial statements, the following key managers made some statements for the consideration of the Managing Director. Notable among them were reprinted for the consideration of the board. The Group General Manager argued and was quoted here that: "Figures to be included in the financial statement are always grey and that there are very little absolute figures in the financial statement. A smart manager is able to save the reputation of the business in times of financial difficulties by simply changing accounting policies to boost performance of the business. Just a change of the company's depreciation policy from straight line method to reducing balance method is enough to change the company's net loss to net profit for the business". The Group Operational Manager sided with the comment made to change net loss to net profit using the company's policy and defended his position that "Managers are engaged to maximize profits for the shareholders, 9