Ethics and profits

Hi

when we recognize provisions we are overstating our expenses for the year. this usually happen when company meets it current year profit target and wanted to shift the effect next year to maintain profit.

so next year when we do reversal we increase our profits and remove provisions.

This may against the ethical principal as it may effect the fair presentation of the financial statements and effect the decision of primary users of financial statement.
if that adjustment is recommended to an accountant by finance director then he must remind him of the ethical code by ACCA and result in additional intimidation and self interest threat.

I hope that helps