Page 17 - OCS Workbook - Day 2 Tasks (May 2018)

Chapter 10

FINANCIAL REPORTING AND

TAXATION (F1)

PRACTICE TASKS

EXERCISE 1 (CORPORATE GOVERNANCE)

UPDATE

Last week the media reported a scandal concerning a similar sized, publically traded entity to
Mansako, operating in the luxury goods industry. After a lengthy investigation it was discovered
that the entity had been using window dressing and creative accounting to falsify their financial
statements.

In wake of the fraud case the stock market has been shaken and share prices are falling across the
entire luxury goods sector. The media have called the high profile fraud “One of the largest
examples of the abuse of trust placed in the management of a publically traded company by
investors”.

TRIGGER
Today you receive the following email from Gwen Giovanni, Finance Manager:

From: Gwen Giovanni, Finance Manager.
To: Finance Officer
Date: Today
Subject: Corporate governance.

Good morning,

In light of the recent media scandal surrounding fraud and creative accounting our shareholders
are calling for Mansako to abide by a code of corporate governance. Although this is not a
compulsory requirement for listed companies in Lowerland, and not ingrained in law we feel it
would give reassurance to our shareholders, and wider stakeholders for us to voluntarily take up
compliance with the code.

(continued on the next page)

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