Part A (a) Briefly describe two components of the universalism perspective. (2 marks) (b) What is the key difference between the relativism perspective and the universalism perspective? (2 marks) Part B You are a part of an audit team conducting an audit for a listed company on the Australian Stock Exchange. You notice that the company has been writing down the value of its inventory under AASB 102 Inventories. These costs are material and could certainly influence the decisions made by users of the financial information. You also know that many shareholders in this company are mum and dad investors who have invested significant funds into the company. One afternoon, you overhear the CEO speaking about how the company will fly under the media radar due to its low earnings for the financial year. You speak to the audit committee, who advise you they will look into it. After two weeks, they tell you the inventory was written down because it is obsolete. You speak to your audit manager, who tells you not to worry. The audit manager is afraid the audit firm will not be engaged to conduct future audits for the company as the company has mentioned a cheaper audit firm is willing to do the same work. The audit partner also reminds you there is a potential to receive a gift voucher for your outstanding work throughout the audit engagement. You also learn from one of your colleagues that your audit manager has personal relations with the CEO of the company. (a) Is the accounting treatment of inventory an example of creative accounting? Why or why not? (4 marks) (b) Why might the CEO be rationalising the decision to apply the accounting standard in this way? (4 marks) (c) How would you proceed with the above scenario? In your answer, make reference to at least two of the IESBA (APES 110) principles and two threats from the IFAC code of ethics.