S1 Judgement, uncertainty and ethics

In Section A of S1, how many of the 50 marks are for professional ethics?

• 1 36
• 2 10
• 3 8
• 4 6

A finance manager is under pressure to estimate a provision at a low value so that a covenant is met. This is a threat of:

• 1 Advocacy only
• 2 Familiarity only
• 3 Self-interest and intimidation
• 4 None

Estimation uncertainty must be disclosed when:

• 1 Any estimate is used
• 2 The auditor requests it
• 3 There is a significant risk of a material adjustment to carrying amounts in the next year
• 4 The estimate is for a depreciation charge

When a standard requires a judgement, the most useful answer to explain it will:

• 1 Quote the standard only
• 2 State the judgement, the assumptions, the effect of changing them and the disclosure
• 3 Avoid a conclusion
• 4 Give the figure only

Which of the following is a common sign of management bias in estimates?

• 1 Use of independent experts
• 2 Changes made on the basis of new information
• 3 Estimates that consistently move in the direction that helps to meet a target
• 4 Estimates that are reviewed by the audit committee

A company is asked by its bank to report a lower level of debt at the year end. The accountant's first step should be to:

• 1 Agree to avoid losing the loan
• 2 Tell the press
• 3 Delete the liability
• 4 Consider whether the request conflicts with the standards and raise it with those charged with governance