Question 6

Castle Plc, a leading printing company, has offered you a placement as a trainee accountant. Castle Plc holds Annual General Meetings (AGMs) six months following the reporting period.

The following information becomes available to you in the preparation of the financial reports for the year ended 30 September 2019.

The profit for the year amounted to 570,000.

1. A quarter of the reported inventory figure relates to diaries printed for the year 2019. Diaries outside the usual inventory cycle are sent for recycling at an insignificant cost to Fosse Ltd.
2. The revenue figure is inclusive of sales to a customer on 20 September 2019. 400 worth of these goods was returned on 29 September 2019 for defects but this was not adjusted in the accounts.
3. The chief accountant has suggested the financial reports would not be ready until May 2020 this year due to staff illness.
4. The financial report was shown to the new managing director who is a trained journalist. She felt the terminology used in the financial reports was not friendly to her and would surely not be clear to a large section of the shareholders.
5. Castle Plc was undergoing the implementation of a computerised filing system which was halted for the Christmas break. During the break a fire in a nearby facility caused a loss of approximately half of the paper records of invoices which were yet to be stored.

Requirement:

In each of the above scenarios, discuss any qualitative characteristics which have been compromised. Where there is no compromise, state this clearly. Make clear references to the scenario to justify your answer.

(maximum word count 200 words)