- 5 Marks
Question
c) An Accountant is not immune from putting their interest ahead of organizational goals. The tendency to hide serious errors that might affect one’s competence as an Accountant cannot be discounted. This is especially the case when an increase in remuneration is based on performance assessment.
Required:
Explain TWO (2) examples of circumstances that may create self-interest threats in performance management. (5 marks)
Answer
Self-interest threats may occur due to the financial or other personal interests of an accountant or their immediate or close family members. Self-interest may tempt an accountant to withhold information that might damage them financially or get them into trouble with their bosses.
Examples of circumstances that may create self-interest threats in performance management include:
- Incentive Compensation Arrangements: An accountant’s bonus may depend on improvements in reported efficiencies or profitability, leading them to manipulate figures or hide inefficiencies to secure their remuneration.
- Inappropriate Personal Use of Company Assets: An accountant may misuse company resources for personal gain, such as using company funds for personal expenses, especially when they believe it won’t be detected.
(5 marks)
- Tags: Ethical Challenges, Performance Management, Self-Interest Threats
- Level: Level 2
- Topic: Models of evaluation Quality
- Series: NOV 2021
- Uploader: Dotse