Question A3 Management may choose conservative or aggressive accounting approaches when reporting the financial performance and financial position. Answer parts a) to d) in point form. a) 'Both conservative and aggressive accounting choices create sustainability issues.' Do you agree with this statement? (max words 100). (0.5*2=1 mark) b) Companies should prepare financial statements in compliance with accounting standards and publish audited accounts, ensuring the quality of reporting. However, maintaining consistent reporting quality remains a challenge. This is because individuals responsible for reporting financial information tend to issue low-quality reports due to many reasons. What is your view on this? (max words 200). (0.5*4=2 marks) c) Suppose senior management of a corporation intends to report increasing financial performance and improving financial position for the current period. What choices are available for them to consider in achieving their goals? (max words 100). (0.5*2= 1 mark) Page 3 of 6 d) Accounting choices do not violate the standards, however, involve managerial judgements, affecting reporting quality. Managers who manipulate financial information leave evidence. Commonly, the evidence relates to manipulation of revenue and expenditure recognition. Analysts should be able to pick the evidence and warning signs of information manipulation in financial reports. As an analyst, if you are sceptical about the reported revenue figure, what should be your approach to find any evidence of manipulation? (max words 250). (0.5*4=2 marks)