Sundream Holidays Ltd. is a public company and reports using IFRS. The company sells vacation packages and has a new chief executive officer (CEO) who is reviewing the draft December 31 year-end financial statements prepared by the companys controller. On these statements, the current assets total $400,000 while the current liabilities total $210,000, which results in a current ratio of 1.9:1. Several months ago, the company obtained some new bank financing that requires it to maintain a current ratio of at least 2:1. After reviewing the statements, the CEO suggests that the controller change the financial statements for two transactions. The first transaction involves a vacation package (flights and accommodation) that was sold to a ski club. The vacation starts in two months time, in early March, and the club has paid $12,000 in advance for the trip. Because the cash has been received, the CEO suggests that the credit entry portion relating to this transaction be shown in revenue. The second transaction relates to an accrual of $3,000 for December interest expense that is not due until early January. The CEO suggests that this accrual should not be made because the interest is not due until next year. You are to assume the role of the controller in this case response. In the upcoming year-end planning meeting with the CEO, you will take the opportunity to discuss why you will or will not proceed with the change requests put forth. Where applicable, you may find it helpful to provide some technical background to support your recommendations. You will need to tailor your presentation response to the CEO (non-accountant). You should also consider how you might address these very delicate points. It could get awkward! Questions to incorporate into your response: 1. Who are the stakeholders in this situation? 2. How will agreeing to the CEOs request have an impact on the financial statements? 3. Is the CEO acting in an ethical manner? Why or why not? 4. In what way does the existence of accounting standards enhance ethical behaviour?