Fresh Foods Inc. (FFI) is a publicly traded company and is audited by the firm Moore and Taylor LLP. The 2021 FFI audit contained many disputes between management and the auditors. After completing the 2021 audit and issuing an unqualified opinion S&I LLP contemplated resigning as the auditors of FFI. After much contemplation the firm ultimately decided to continue as auditor of FFI and the firm partners collectively decided to rotate the existing FFI engagement partner, Lily Tomlin, to a new partner, Jim McCarter.

Jim has not had any prior contact with FFI or involvement in the audit of its of financial statements. Jim is a senior partner with the firm and was chosen because of his strong technical knowledge and his ability to deliver tough messages to clients.After accepting the engagement to do the 2022 year end audit , Jim obtained the 2021 audit file and reviewed the revenue recognition policy for FFI. The audit file contained a memo which was signed off by Lily Tomlin analyzing this same issue. After significant analysis Lily concluded in the memo that the revenue recognition policy at FFI was in compliance with IFRS. Jim disagreed with Lily's analysis, he concluded that the revenue recognition policy was not in compliance with IFRS and the financial statements for previous years were materially misstated.

Jim was very concerned and discussed the issue with another senior partner, Joanne Jones, who agreed with Jim's conclusion. Joanne suggested that instead of requiring FFI to restate prior periods because of an "error correction" Jim could ask FFI to restate prior periods based on a "change in accounting policy". Joanne thought this would soften the impact of the restatement.

Assume you are Jim McCarter, and complete the following analysis of this ethical issue:

1. Explain the ethical issue that needs to be resolved. (Use case facts and the rules of professional conduct to explain

1. Explain who is affected by this issue and how they are affected.

Who is affected?	How are they affected?

1. Provide 4 different alternatives available to Jim and describe the consequences of each alternative.

Alternative available to Jim	Consequences of each alternative

Alternative available to Jim	Consequences of each alternative

Alternative available to Jim	Consequences of each alternative

Alternative available to Jim	Consequence of each alternative

1. Recommend a course of action for Jim and explain your rationale.