QUESTION 1

Meksah is a dedicated professional accountant who works for Qurata Berhad, an established textile company. Being a committed young lady with a good track record, Meksah is expecting a promotion for her excellent performance with the company. Due to stiff competition in local textile industry, Qurata Berhad plans to market its products overseas. However, the current financial information reveals an unhealthy status of business performance. The company is still holding worth RM2 millions of unsold stock near year end.

Qurata Berhad has consistently making provisions for the slow moving stock. This is one of the accounting policies adopted by the company. Nevertheless, Mr. Jay, the Chief Financial Officer, has given a contradicting instruction to Meksah regarding the treatment for the stock. Mr. Jay directed that no provision should be made for slow moving stock this year as it would negatively affect the profitability of the business. Meksah is puzzled and just cannot focus in performing her daily routines. She knows if she obeys to the instruction, she'll owe a big explanation to the auditors during their visit.

Required:

a.Explain to Meksah the two (2) important reasons why she should put the veil of ignorance in performing her duties as professional accountant when comes to making the right decision.

(6 marks)

b.Using the 3-Questions Approach (well-offness, fairness and rights), evaluate the ethicality of Mr. Jay's instruction to Meksah not to make any provisions on the company's slow moving stock for the year.