The financial accountant at Modern Technology Ghana Limited is faced with an ethical dilemma regarding the treatment of the lease in the financial statements. The ethical and professional issues involved include:

1. Integrity:
   • The financial accountant is ethically bound to act with honesty and integrity. If the lease meets the criteria for a finance lease under IAS 17, it must be presented as such in the financial statements, regardless of the finance director’s instructions to treat it as an operating lease. Misrepresenting the lease as an operating lease would violate the principle of integrity and mislead stakeholders.
2. Objectivity:
   • The financial accountant must remain objective and avoid being influenced by the finance director’s preference to omit the finance lease from the statement of financial position. The finance director’s desire to manipulate the financial statements to enhance the company’s chances of securing a loan constitutes unethical pressure, which could result in misleading financial information.
3. Professional Competence and Due Care:
   • The financial accountant must demonstrate professional competence by applying the correct accounting standards (IAS 17) to classify the lease. If the lease transfers substantially all the risks and rewards to the lessee, it must be classified as a finance lease. Failing to apply due care in this situation would undermine the financial accountant’s responsibilities as a professional.
4. Transparency and Fair Presentation:
   • The financial statements should provide a true and fair view of the company’s financial position. The accountant has an ethical obligation to ensure that the financial statements are transparent and that the lease is recognized appropriately. Treating the lease incorrectly as an operating lease would obscure liabilities and mislead potential lenders, violating the principle of fair presentation.
5. Conflict of Interest:
   • The financial accountant may face a conflict of interest, as failing to follow the finance director’s instructions could affect their job security. However, the accountant must prioritize professional ethics and the accuracy of the financial statements over personal concerns.

Conclusion:

The financial accountant must adhere to the ethical principles of integrity, objectivity, and transparency by ensuring that the lease is correctly classified as a finance lease if it meets the required criteria. This decision should be communicated to the finance director, and the potential consequences of unethical financial reporting should be discussed.