DAF Corporation is a pesticide manufacturing company. The company sales declined greatly this year due to the recent legislation outlawing the sale of several DAF's chemical pesticides in North America. During the coming year $2024,$ the company will replace these discontinued products with environmentally safe and competitive chemicals. The company's management expect sales of these new products will exceed those of any prior year. Therefore, the management anticipates that the decline in this year's $(2023)$ sales and profits may be a one$-$off incident.

Several financial analysts have been closely following the company with some trepidations while one analyst $($Thomas Trum$)$ seems optimistic of DAF's performance. Thomas performs dual roles, both as an analyst and investment banker$/$advisor to DAF. Sources have indicated that Thomas sat in most closed$-$door senior management meetings at DAF.

Prior to the recent quarterly earnings announcement, DAF's share price has falling by $8\%$ over the last year and is currently trading at $$128\mathrm{.}60.$ The general sentiment has forecast earnings of $$1\mathrm{.}45$ per share.

Given the current market condition, Charles Weet $($President of DAF$)$ advises the Controller $($Harry Dudd$)$ to accrue all possible revenue and to defer all possible expenses in the $2023$ year$-$end adjustments. According to Charles, the company needs as much revenue as possible for $2023$ and $2024$ so that it can easily absorb all expenses deferred from $2023.$ This will also avoid the stock price being hammered down. Harry did not record the adjustments until Jan $20,2024,$ but still dated them as December $31,2023$ as if they were recorded then. Harry made every effort to satisfy Charles' request.

$1.$What type of information asymmetry is present in this case and how could DAF decrease its effects?

$2.$Based on the IFRS framework, explain ONE $(1)$ Fundamental and ONE $(1)$ Enhancing characteristics that have been violated.

$3.$What kinds of problems do you see arising from Charles and Harry's actions?

$4.$How do you think the share price will perform on the day of earnings announcement?