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.Describe two (2) negative implications Meksah may experience if she follows what is being instructed by Mr. Jay.

(4 marks)

b.Explain briefly the action of Mr. Jay to give such an instruction to Meksah based on the axiom of Islamic Ethics: Responsibility.

(4 marks)