Luca is an accountant of engine parts manufacturer named as Vroom Ltd. Her manager, Freda Chuse got bonus based on profitability of the company. Vroom Ltd also got grant from the government to employ and train mechanics. At the year ending 30 June 2019, they found that company will be able to make a large amount of profit. Manager approached the accountant Lucia and said that if company made high amount of profit, the government would stop paying them. So, Freda instructed Lucia to forecast that company was very poor.

Who are the stakeholders in this situation?

Why do you believe Freda asked Lucia to do this work?

What are the ethical issues involved?

Can Lucia defer revenues and accrue as many expense as possible and still be ethical?